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Rusal Readies for Billionaire Shoot Out Over Norilsk Nickel

Rusal Readies for Shoot Out That Would End Billionaires Dispute

(Bloomberg) -- United Co. Rusal is readying for a potential shoot out deal for MMC Norilsk Nickel PJSC that could resolve a dispute between billionaire shareholders going back to the last decade.

Rusal released a statement on Friday laying out certain steps it could take in the event of a shoot out, a type of forced auction in which the losing bidder must sell his stake to the winner. The Russian aluminum maker controlled by Oleg Deripaska is embroiled in a legal fight with Vladimir Potanin’s Interros Holding Co. over a potential sale of shares in Norilsk Nickel.

Even though Rusal is making preparations, the auction looks uncertain. Invoking the option is too complicated and likely impossible, three people familiar with situation said last week.

The Nornickel saga is a “bluff," Kirill Chuyko, chief of research at BCS Global Markets said in a report earlier this week. “We believe it is all just noise."

It’s highly unlikely that the shoot out will happen because the financing would be excessive, even for state-owned banks, Andrey Lobazov, an analyst at Aton LLC said in a report on Feb 22.

On Friday, Rusal said it will seek approval from shareholders to take part in the shoot out. That would give the board authorization for a year if either Rusal or Interros decide to trigger the option.

If Rusal must buy Interros’s stake, it seeks approval for the purchase, which could be as much as $15.4 billion, according to a statement. If Rusal is selling, it shouldn’t accept an offer lower than $320 a share. That’s about a 60 percent premium to the share price of the company, also known as Nornickel, on Feb. 22.

Rusal Readies for Billionaire Shoot Out Over Norilsk Nickel

Under the shoot-out provision in the shareholder agreement, Potanin and Deripaska may offer to buy out the other’s stake in Nornickel for at least 20 percent more than the six-month average share price. Any such offer would be a high-stakes gambit and trigger a price auction in which the loser was obliged to sell his stake to the winner.

Nornickel has a market value of $32 billion, with Deripaska controlling about 28 percent and Potanin 31 percent. In the event of a sale, Rusal would receive no less than $9.7 billion.

Interros’s press service declined to comment. A spokesman for billionaire Viktor Vekselberg, who along with some partners is the second-biggest Rusal shareholder, didn’t immediately respond to messages seeking comment when Russia was closed for a holiday on Friday.

To contact the reporters on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net, Martin Ritchie in Shanghai at mritchie14@bloomberg.net.

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Jason Rogers at jrogers73@bloomberg.net, Tony Barrett

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