Norilsk Nickel/Polyus Gold stock deals clarify respective ownerships

Russian billionaire Mikhail Prokhorov agreed a $10 billion cash-and-stock deal to gain control of Polyus Gold and allow ex-partner Vladimir Potanin to own almost half of miner Norilsk Nickel. Onexim, Prokhorov's investment group, said on Tuesday it was consolidating a 16.7 percent stake in Norilsk, the world's largest nickel miner, to sell it to Potanin for $6.5 billion in cash and a 35.2 percent stake in Polyus worth $3.5 billion. Prokhorov did not, however, disclose how he acquired the shares he plans to sell. The former Norilsk chief executive sold his one-quarter stake to aluminium group United Company RUSAL in April, part of a wider asset split with former partner Potanin. "It's unlikely Prokhorov could have consolidated a near 17 percent stake from the market," UralSib Financial Corp analysts in Moscow said. Prokhorov and Potanin, ranked Russia's fifth- and sixth-richest men respectively by Forbes magazine, shared control of Norilsk Nickel and Polyus Gold before publicly announcing their plans to divide their assets in January 2007. Potanin, elected chairman of Norilsk on July 7, owned 29.8 percent of the company as of May 26. A further 16.7 percent interest, should the deal be closed, would give him control of 46.5 percent of a company mining a fifth of the world's nickel. Potanin's Interros investment vehicle declined to comment. Onexim said in a statement the $10 billion price for the Norilsk stake values shares in the company at $315 each -- a massive 46 percent premium to the company's closing price on Monday of 5,055 roubles ($215.5) on the MICEX bourse. Norilsk's Moscow-traded stock rose 7 percent soon after the deal was announced, but later retreated to close down 3.9 percent at 4,860 roubles ($207.2), almost in line with a 4.2 percent drop on the bourse's metals and mining exchange. STRATEGIC PARTNER Polyus, Russia's largest gold miner, rose 0.8 percent to 975 roubles ($41.6) having also earlier climbed over 7 percent. Prokhorov already owns around 30 percent of Polyus, which mines a quarter of Russia's gold. By purchasing Potanin's stake, he would increase his interest to around 65 percent. A source within Onexim told Reuters the group would aim to sell the 35 percent stake in Polyus to a strategic partner should it complete the deal with Potanin. The source declined to name the possible partner. Prokhorov sold 25 percent plus two shares stake in Norilsk to UC RUSAL in April. The aluminium firm has said it plans to effect a full merger of the two companies to form a diversified Kremlin-backed mining and metals giant. Prokhorov had not previously declared ownership of any other stake in Norilsk. UBS mining analyst Alexei Morozov said he doubted such a big stake was bought on the market, as the share price would have enjoyed noticeable support from a large buyer. Two fund managers holding minority stakes in Norilsk, both of whom declined to be named, said they had not been approached by Onexim with a view to buying up their shares in recent weeks. But Deutsche Bank analyst Mikhail Seleznyov said he believed the shares were bought on the market. He added: "It is good news for both Norilsk and Polyus, as it makes ownership of both companies more distinct." Norilsk shares have outperformed the benchmark RTS index by more than 8 percent since the July 7 board meeting at which Potanin was elected chairman. Their strength relative to the RTS has been especially marked since July 28, when Prime Minister Vladimir Putin sent stocks into freefall by accusing blue-chip miner Mechel of tax evasion. They have outperformed the RTS by around 26 percent since July 28 on higher-than-usual volumes. UC RUSAL officials were not immediately available for comment. Onexim said in the statement the offer was irrevocable and the deal was expected to be closed by Nov. 15. ---Reuters