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Saturday, 20.08.2011
Norilsk Nickel uses opportune moment for share buyback
Moscow. The metal group Norilsk Nickel uses the weakness of the stock market to announce a buy-back of its own stocks. The group reportedly pays out a generous premium.
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The question of a buy-back will be decided at the board meeting on the 15th August. This would be the second time this year that Norilsk Nickel buys back its own shares. At the beginning of the year, the group already bought back more than nine percent of its shares, for $4.5 billion (€ 3.2 billion).
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Potanin initiates share buy-back
The proposal for a second round of the buy-back program has been put forward by the major shareholder Vladimir Potanin (who owns through his holding company Interros around 30 percent of the shares), who also initiated the first buy-back. The program is part of a brewing power struggle that has been going on for years between Potanin and Oleg Deripaska.
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On the one hand the top management, allied with Potanin, will be able to strengthen its position at the shareholder meeting and on the other hand the profit of the company will not be paid out in dividends (2010: $3.3 billion) that Deripaska`s heavily indebted Rusal group would need.
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50 percent premium for small investors
For minority shareholders, the new buy-back promises big profits. According to Russian media reports, Norilsk Nickel wants to pay a premium of 50 percent to the actual market price of $ 335.7 per share.
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This is equal to the latest offer that Potanin made to his rival Deripaska in February in order to buy him out of the group. Deripaska however rejected the offer of $ 12.8 billion for his 20 percent of shares in Norilsk Nickel (Rusal owns a total of just over 25 percent).
It is still unclear how many shares Norilsk Nickel wants to buy back. The alliance around Potanin holds a total of around 45 percent of the shares.
Rusal heavily criticized the share buy-back program: it is an unfair distribution of corporate profits, complained a Rusal representative.
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Rusal strategy director Maxim Sokov explained that Rusal`s rights would be severely damaged by the second share buy-back. He even called for a lawsuit against the group management and the Interros leadership.
Original German text can be found here >>>
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