New Norilsk offer to buy 20% stake from Rusal could be the last - analysts
MOSCOW. Feb 14 (Interfax) - The terms of the latest offer that MMC Norilsk Nickel made to buy its shares from aluminum giant UC Rusal are unlikely to be improved on in the near future, but Rusal's decision is still hard to gauge, despite a tangible premium over the market and previous offers, analysts told Interfax.
Norilsk Nickel said on February 10 that it was offering to buy 20% of its shares from aluminum giant UC Rusal for $12.8 billion. It previously offered to buy Rusal's entir 25% for $12 billion. The new offer is a 33% improvement on the last and is based on a market cap of $64 billion instead of $48 billion. It is open until 6:00 p.m. Moscow time on March 4, 2011.
"The premium is more than adequate. The price is clearly more or less close to the one Rusal is dreaming of and they will likely feel the pressure from their own shareholders who want to sell the shares and solve the debt problem," VTB Capital analyst Alexander Pukhayev said.
Pukhayev said he was even a little apprehensive about Norilsk's desire to get its shares back from Rusal at any price - it is not clear why buying Rusal out at the new price would benefit all other shareholders.
Uralsib's Dmitry Smolin said the 40% premium over the market for 20% of the shares "could result in Norilsk Nickel overpaying around $3 billion for the Rusal stake."
"It looks like Norilsk will over-pay if Rusal agrees," said Alfa-Bank's Sergei Krivokhizhin. Norilsk is in effect offering $16 billion for the whole Rusal stake. "There's a personal opportunity for Oleg Deripaska, too: if he were to sell for $16 billion now he'd be getting more than he paid," the analyst said.
"It's a huge premium. You have to bear in mind how uncompromising Rusal has been, how often it has called the previous offers inadequate, although they also carried premiums, and has said the investment in Norilsk Nickel is a strategic one. But [this] offer price could interest Deripaska. It's similar to what he paid for the stake," Metropol's Andrei Lobazov said.
"From a financial point of view this is a totally adequate figure, but it is hard to say whether it is a final one. There could be further iterations, with an upward tilt," Troika Dialog's Mikhail Stiskin said.
Alfa-Bank's Krivokhizhin said Norilsk Nickel was running out of opportunities to raise the price and that it could be a long time before the offer is improved again. "Patience has its limits. One of the reasons that Norilsk is proposing to buy 20% and not 25% is that $13 billion is, of course, a lot of money. The money has to be raised, borrowed from banks. Also, the company is in the process of a buyback. If Rusal does not accept this one, then we should'nt expect a new offer in the immediate future," he said.
"I don't think we'll see any new offers at a higher price. Norilsk will probably continue its buyback," Lobazov said.
Uralsib's Smolin said the shareholder conflict would turn out to be positive for investors if the 20% are repurchased and then canceled, and do not appear on the market. The deal will also be structured in such a way as to prevent the 5% that Rusal will be left with from finding its way onto the market, he said.
"There's a strong likelihood that Rusal will agree," Smolin said.