Russian tycoon Prokhorov supports RusAl offer by Norilsk

Russian investor Mikhail Prokhorov, who owns 17 percent in the world’s biggest Aluminum producer – RusAl disagreed with Oleg Deripaska and urged him to consider Norilsk’s $12 billion offer.

Norilsk Nickel – the world’s biggest Nickel producer had offered to buy back 25 percent shares held by RusAl for $12 billion. Terming its investment in Norilsk as ‘strategic’， RusAl refused to part with them. RusAl had received similar offer from Vladimir Potanin in October at a much lower rate of $9 billion and refused that too.

Dmitry Razumov, Chief Executive of Prokhorov’s Onexim Group and a RusAl board member, said by e-mail “This offer must be reviewed by RusAl’s board （as） this offer looks much more realistic compared with the previous one”。

Norilsk’s offer represents a 15 percent premium over its current market price.

Prokhorov had reduced his shareholding in Norilsk in 2008 and sold 25 percent of his stake in exchange of RusAl shares and $4.8 billion in cash.

Potanin’s offer in October was ‘derisory’， said Nathaniel Rothschild, Chairman of the EN+ group – the holding company that owns RusAl’s shares.

Norilsk announced that it has already lined up credit lines from banks including JP Morgan Chase, Morgan Stanley and Goldman Sachs for the possible buy out. Norilsk plans to cancel 20 percent of it’s own share over the next three years if RusAl sells and may issue separate equity instruments to bring its debt down.

In a statement issued on Thursday, Norilsk said both its retail and institutional investors supports its latest move as it’s ‘the most efficient at the moment’。

Supporting Norilsk’s offer, Moscow based Nomura analyst Vladimir Zhukov said “It’s a very attractive price. From Norilsk’s perspective, it’s a good investment given its excessive cash flows; while for RusAl the amount equals its gross debt and allows it to solve the debt problem in one go”。