Nickel giant to have one owner

Mikhail Prokhorov, the President of Onexim, is ready to sell his stake of 25% plus one share in metals giant Norilsk Nickel. The stake is worth $US 15.7 billion according to Prokhorov. The news follows an offer made earlier on Wednesday by his ex-business

It took more than 6 months for the two men to split the company that they started together.

They'd seen it grow from a small venture into a metals major producing 20% of the world's nickel. Although Prokhorov and Potanin still have common business interests, Norilsk Nickel was the jewel in the crown of their former empire.  

Now the main question is how to get enough funds to clinch the deal with a liquidity crisis underway.

Business analyst Kirill Chuiko says raising the money for one of Russia's biggest business deals could be difficult.
“The key issue is financing: whether Potanin will be able to get financing because for sure he doesn’t have enough cash, enough resources to buy Prokhorov’s stake.

So I think there is a high chance that there will be a consortium of banks, including foreign banks and Russian state owned ones,” Chuiko said.

Mikhail Prohorov stepped down as CEO of Norilsk Nickel in spring 2007.  A couple of months later, he set up his own investment fund, saying he plans to focus on energy, not metals, in the future.

However   experts say that having one owner instead of two will not make a big difference for the company itself.

Aton Investment Group analyst Dmitry Kolomytsyn says Norilsk shares have already reacted postively to the deal.  

“It is an attractive stock to be with. No matter who owns the shares, because none of the guys is part of the board of directors,” Kolomytsyn said.

The deal is likely to be sealed within half a year, but the final price is still being discussed. Prokhorov is ready to sell for $US 330  per share, which is 17% premium to the market, but the talks are still ongoing, as there are other possible ways to settle the deal.

“Potanin may sell his stake in Polus Gold for instance, either to Prokhorov or to Alrosa company. Alrosa has expressed its interest but does not want to buy the company at very high price. So I think that the rest of the company that both businessmen have can be used to settle down the acquisition price,” Kirill Chuiko said.

Vladimir Potanin, head of the Interros holding, owns 25% of Norilsk Nickel. Acquiring his former partner's stake will raise his share to 53.5%. Under Russian legislation, with more than a 50% stake, Potanin will have to offer to buy out minority shareholders.

A partner in DBM Capital, Tim McCutcheon, says it's unlikely that a company the size of Norilsk Nickel will remain entirely in the private sector.

“ We have already seen in other major companies, where the state does not tend to allow one person to have control over a strategic asset,” McCutcheon said.