04 Mar 2008 00:54 GMT
DJ WSJ(3/4) Bidding War Shapes Up For Russia's Norilsk Nickel
(From THE WALL STREET JOURNAL)
By Andrew Osborn
MOSCOW -- Shares of the world's largest nickel producer, OAO Norilsk Nickel, rose yesterday after a potential rival bidder emerged in what is shaping up to be Russia's largest takeover.
Norilsk shares rose 5.4% on Moscow's RTS exchange, hitting $300 a share at one point before finishing the day at $299. The jump followed confirmation from Norilsk that its board agreed Friday to explore a merger with Russian metals company OOO Metalloinvest.
Such a deal would complicate the plans of aluminum giant United Co. Rusal, which is in the process of taking a 25% stake in Norilsk in what it says is a prelude to a $50 billion-plus takeover that would create a Russian giant to rival global mining players like BHP Billiton.
One or both potential deals might still fall through, particularly as tight global credit markets have made it harder for even strong companies from emerging markets to raise capital. A larger deal involving all three companies also could be possible, according to people close to the talks.
The struggle over Norilsk comes as Russia's oligarchs rush to forge national champions in different sectors as part of a Kremlin drive to profit from and control the country's vast natural resources amid a boom in commodity prices.
Norilsk came into play late last year as the two Russian billionaires who owned it divided their assets in a bitter split-up. But Vladimir Potanin wasn't able to raise the $15.7 billion needed to buy the 25% stake of his partner, Mikhail Prokhorov, and Rusal swept in to make the deal. Rusal is controlled by Oleg Deripaska, one of Russia's richest men.
Norilsk has reacted coolly to Rusal's approach, fearing it could fall victim to a takeover by stealth that would see minority shareholders squeezed out on the cheap.
Metalloinvest is a major player in iron ore and steel in Russia. A company spokesman said it had signed a confidentiality agreement and started due diligence on Norilsk.
Rusal declined to comment.
(END) Dow Jones Newswires
03-03-08 1954ET
