Mikhail Prokhorov's Onexim Group said Tuesday that it had agreed to sell 16.66 percent of Norilsk Nickel to Vladimir Potanin's Interros in a $10 billion cash-and-asset swap that would give Prokhorov control of Polyus Gold.
The status of the deal remained unclear, however, as Interros refused to confirm it and Onexim would not say how it had acquired 16.6 percent of Norilsk.
A deal, if confirmed, could signal an end to the messy business divorce between former partners Potanin and Prokhorov, who have struggled to agree on terms since agreeing to split their assets in January 2007.
In its statement, Onexim said it was consolidating a 16.66 percent stake in Norilsk for subsequent sale to companies affiliated with Potanin as part of an offer made by Prokhorov.
Under the deal, the shares would be exchanged for $6.5 billion in cash and a 35.2 percent stake in Polyus, worth $3.5 billion, by Nov. 15, Onexim said.
Onexim's deal would give Prokhorov more than 60 percent of Polyus, Russia's biggest gold producer, while Potanin would hold at least 47 percent of Norilsk, the world's biggest nickel producer.
"In accordance with the terms of the irrevocable offer, affiliates of Vladimir Potanin are prepared to acquire the said stake for $10 billion, or $315 per share," the statement said.
Norilsk, which was valued at $216 per share on the MICEX exchange as of Monday's close, initially rose 6.6 percent after the announcement but then fell back after Interros failed to confirm the deal. Norilsk closed the day down 114.61 rubles, or 2.3 percent, at 4,945.14 rubles.
Polyus' shares also jumped 6.6 percent on Onexim's statement, but then fell back to close the day up 10.51 rubles, or 1.1 percent, at 978.50 rubles.
A source at Interros said late Tuesday that no offer had been received from Onexim. "We didn't even get the press release," the source said, but added that Potanin would consider such an offer, were it to be made.
Onexim Group spokesman Sergei Chernitsyn declined to elaborate further, saying "his company said all what it wanted to say in the statement."
Andrei Kirpichnikov, a spokesman for Interros, refused to comment.
Prokhorov in April sold a 25 percent stake in Norilsk to billionaire Oleg Deripaska's RusAl in exchange for a 14 percent stake in RusAl and an undisclosed cash sum. Before Tuesday, Prokhorov was not thought to be holding any substantial stake in Norilsk.
A market source familiar with the situation said Prokhorov was not actually holding the number of Norilsk shares he claimed, but was in fact launching a "legal attack" on Potanin based on an offer by Interros in November 2007 to buy Norilsk shares from Onexim.
"This is a legal attack by Onexim on Interros," said the source, who requested anonymity, citing confidentiality rules.
"This stems from an offer made to Onexim by Interros for $32 per Norilsk share going back to the time when Onexim was in the process of selling to RusAl. Apparently, that offer was open-ended, and now Onexim is enforcing it."
A source close to an investor in Norilsk who requested anonymity because of the sensitivity of the issue said that Prokhorov had two ways to go.
"If Prokhorov did have that 16 percent, together with Deripaska he would own 41 percent," the source said. "They would have the right to call an extraordinary shareholders meeting to elect a new board, which would have more of their own, not Potanin's representatives. But Prokhorov did not do it, [instead] choosing to sell them to Potanin, Deripaska's rival."
"So, either Prokhorov is now in conflict with Deripaska, or he doesn't have the 16 percent," the source said.
Alternatively, the source said, Prokhorov could buy the shares from RusAl.
RusAl has an agreement with Prokhorov that if an IPO is not held by 2009, it should either return the Norilsk shares to Prokhorov or buy Prokhorov's RusAl shares back, the source said. "As [RusAl] doesn't have enough money now, and the IPO has been suspended by the [London] court proceedings against Deripaska, they may [consider that] becoming a Norilsk portfolio investor is the best choice," the source said.
Potanin and Prokhorov announced they had concluded the split of their business assets on May 15 ?€” coincidentally, six months before the date Onexim gave as the deadline for concluding Tuesday's putative deal.
RusAl did not respond to repeated requests for comment Tuesday about whether Prokhorov had bought back any Norilsk shares.
However, the market source said RusAl was not in anyway involved in the transaction.
The source said Prokhorov was planning to execute the transaction in two tranches.
"The first 8 percent will be delivered by Sept. 11. It will be made up of stock bought in the market and stock pledged from certain existing holders. In return, Potanin will deliver cash and 35 percent of Polyus," the source said.
The source added that Potanin was likely to be able to buy the first 8 percent but not the second.
Potanin said in May he wanted to merge Norilsk with iron-ore giant Metalloinvest, and invited Oleg Deripaska to join in a three-way merger. RusAl has not responded to the invitation but is thought to prefer a two-way merger with Norilsk.
Potanin was last month elected as Norilsk board chairman, and has since promoted candidates loyal to him to key posts in the company.
Interros has nominated Vladimir Strzhalkovsky, the outgoing Federal Tourism Agency chief who is a close ally of Prime Minister Vladimir Putin's, to be elected the company's CEO at its board meeting Friday.
The status of the deal remained unclear, however, as Interros refused to confirm it and Onexim would not say how it had acquired 16.6 percent of Norilsk.
A deal, if confirmed, could signal an end to the messy business divorce between former partners Potanin and Prokhorov, who have struggled to agree on terms since agreeing to split their assets in January 2007.
In its statement, Onexim said it was consolidating a 16.66 percent stake in Norilsk for subsequent sale to companies affiliated with Potanin as part of an offer made by Prokhorov.
Under the deal, the shares would be exchanged for $6.5 billion in cash and a 35.2 percent stake in Polyus, worth $3.5 billion, by Nov. 15, Onexim said.
Onexim's deal would give Prokhorov more than 60 percent of Polyus, Russia's biggest gold producer, while Potanin would hold at least 47 percent of Norilsk, the world's biggest nickel producer.
"In accordance with the terms of the irrevocable offer, affiliates of Vladimir Potanin are prepared to acquire the said stake for $10 billion, or $315 per share," the statement said.
Norilsk, which was valued at $216 per share on the MICEX exchange as of Monday's close, initially rose 6.6 percent after the announcement but then fell back after Interros failed to confirm the deal. Norilsk closed the day down 114.61 rubles, or 2.3 percent, at 4,945.14 rubles.
Polyus' shares also jumped 6.6 percent on Onexim's statement, but then fell back to close the day up 10.51 rubles, or 1.1 percent, at 978.50 rubles.
A source at Interros said late Tuesday that no offer had been received from Onexim. "We didn't even get the press release," the source said, but added that Potanin would consider such an offer, were it to be made.
Onexim Group spokesman Sergei Chernitsyn declined to elaborate further, saying "his company said all what it wanted to say in the statement."
Andrei Kirpichnikov, a spokesman for Interros, refused to comment.
Prokhorov in April sold a 25 percent stake in Norilsk to billionaire Oleg Deripaska's RusAl in exchange for a 14 percent stake in RusAl and an undisclosed cash sum. Before Tuesday, Prokhorov was not thought to be holding any substantial stake in Norilsk.
A market source familiar with the situation said Prokhorov was not actually holding the number of Norilsk shares he claimed, but was in fact launching a "legal attack" on Potanin based on an offer by Interros in November 2007 to buy Norilsk shares from Onexim.
"This is a legal attack by Onexim on Interros," said the source, who requested anonymity, citing confidentiality rules.
"This stems from an offer made to Onexim by Interros for $32 per Norilsk share going back to the time when Onexim was in the process of selling to RusAl. Apparently, that offer was open-ended, and now Onexim is enforcing it."
A source close to an investor in Norilsk who requested anonymity because of the sensitivity of the issue said that Prokhorov had two ways to go.
"If Prokhorov did have that 16 percent, together with Deripaska he would own 41 percent," the source said. "They would have the right to call an extraordinary shareholders meeting to elect a new board, which would have more of their own, not Potanin's representatives. But Prokhorov did not do it, [instead] choosing to sell them to Potanin, Deripaska's rival."
"So, either Prokhorov is now in conflict with Deripaska, or he doesn't have the 16 percent," the source said.
Alternatively, the source said, Prokhorov could buy the shares from RusAl.
RusAl has an agreement with Prokhorov that if an IPO is not held by 2009, it should either return the Norilsk shares to Prokhorov or buy Prokhorov's RusAl shares back, the source said. "As [RusAl] doesn't have enough money now, and the IPO has been suspended by the [London] court proceedings against Deripaska, they may [consider that] becoming a Norilsk portfolio investor is the best choice," the source said.
Potanin and Prokhorov announced they had concluded the split of their business assets on May 15 ?€” coincidentally, six months before the date Onexim gave as the deadline for concluding Tuesday's putative deal.
RusAl did not respond to repeated requests for comment Tuesday about whether Prokhorov had bought back any Norilsk shares.
However, the market source said RusAl was not in anyway involved in the transaction.
The source said Prokhorov was planning to execute the transaction in two tranches.
"The first 8 percent will be delivered by Sept. 11. It will be made up of stock bought in the market and stock pledged from certain existing holders. In return, Potanin will deliver cash and 35 percent of Polyus," the source said.
The source added that Potanin was likely to be able to buy the first 8 percent but not the second.
Potanin said in May he wanted to merge Norilsk with iron-ore giant Metalloinvest, and invited Oleg Deripaska to join in a three-way merger. RusAl has not responded to the invitation but is thought to prefer a two-way merger with Norilsk.
Potanin was last month elected as Norilsk board chairman, and has since promoted candidates loyal to him to key posts in the company.
Interros has nominated Vladimir Strzhalkovsky, the outgoing Federal Tourism Agency chief who is a close ally of Prime Minister Vladimir Putin's, to be elected the company's CEO at its board meeting Friday.
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