Deripaska challenges rival Norilsk shareholder

MOSCOW, Aug 7 (Reuters) - Russian billionaire Oleg Deripaska on Thursday accused a rival Norilsk Nickel shareholder of seizing control of the company and threatened legal action as a fight to control the world's largest nickel miner intensified. Deripaska said his aluminium company, a one-quarter owner of Norilsk, would not pursue a full merger to create a Russian mining champion ahead of its own share float and said he had yet to see if such a merger would bring value to his company. "You can sit a cat and dog next to each other, but it's unlikely you will get a family," Deripaska told reporters at his company's headquarters in central Moscow. Deripaska is at odds with another billionaire, Vladimir Potanin, over control of Norilsk, a $38 billion company which supplies a fifth of the world's nickel and over half its palladium from mines deep in the Russian Arctic. Deripaska, Russia's richest man, said he believed Potanin had the support of 34.7 percent of Norilsk shareholders -- more than would be required to trigger a mandatory takeover offer and more than the 29.8 percent disclosed as of May 26. United Company RUSAL, the aluminium firm majority owned by Deripaska, owns 25 percent plus two shares in Norilsk, which it acquired in April from Potanin's ex-partner, Mikhail Prokhorov. "We have come to understand that Potanin has taken control of the company," he said. "If we find a basis to our claims our rights have been violated, we don't rule out legal action." Potanin's Interros investment vehicle in turn issued a statement saying separate public statements by Prokhorov and UC RUSAL were "aimed at manipulating the stock market" and would damage Norilsk's market value. The company's stock has declined 37 percent from a mid-May peak, in line with weaker nickel prices, but it has outperformed the benchmark RTS index .IRTS by more than 25 percent since July 28 in higher-than-usual volumes. NEW CEO A board meeting on Friday will be the next battleground. UC RUSAL said in a statement it would oppose the election of Vladimir Strzhalkovsky as chief executive of Norilsk. The ex-KGB official was proposed by Potanin. UC RUSAL has also requested the intervention of Russia's markets watchdog to establish the basis on which Prokhorov was able this week to offer Potanin a 16.7 percent stake in Norilsk for a total consideration of $10 billion. [ID:nL5631294] A Federal Financial Markets Service spokeswoman said the service had not received any request from UC RUSAL and had no information that Potanin had consolidated a stake in excess of 30 percent in Norilsk. Deripaska said he did not have enough information about Norilsk to evaluate a full merger of the two companies. Asked whether a merger would take place, he said: "Not now. In the current conditions, we cannot undertake detailed analysis." He added: "RUSAL has a 13-year strategy. We want to see Norilsk's strategy." Deripaska said UC RUSAL would only consider such a merger after its own initial public offering: "RUSAL is ready for an IPO, but the market is not good right now." The 40-year-old businessman ruled out a three-way merger that would also incorporate the iron ore mines and steel mills of Metalloinvest, founded by billionaire Alisher Usmanov. "A triple merger will never happen. It's of no interest to us. We don't see a future for ourselves in the steel business." Potanin and Usmanov have already agreed an asset swap that many analysts have interpreted as a defence against a takeover by UC RUSAL. The two men said they would invite UC RUSAL to participate. BOARD CHALLENGE Deripaska said that, should Strzhalkovsky be elected Norilsk's CEO as expected, UC RUSAL would pursue a new shareholders' meeting to elect a new board and replace the CEO. Deripaska believes the current board favours Potanin. Current CEO Sergei Batekhin has been in the job for only two weeks after replacing Denis Morozov. Deripaska said his aluminium company would retain its stake in Norilsk whatever the outcome: "We will not sell our stake, even if Potanin tables an offer for the entire company."