Norilsk Considers Buyback

Norilsk Nickel will consider buying back shares and will sell its energy assets that the company failed to spin off into a $7 billion company in December.

Norilsk will review the buyback proposal "soon," CEO Denis Morozov said Monday, without providing a timeframe or a stake the management wants to acquire. Norilsk will buy stock to create "additional shareholder value," he said.

"It's an anti-takeover defense," said Vladimir Zhukov, an analyst with Lehman Brothers. "A buyback will increase the management's power to negotiate with RusAl."

United Company RusAl last week got approval to buy a 25 percent stake in Norilsk from Mikhail Prokhorov. RusAl said in December the stake would be the first step in a takeover.

RusAl has already received "most" of the seven approvals it needs from antitrust authorities and will acquire the Norilsk stake "soon," Morozov said.

No decisions have been made on the buyback size, he said. Norilsk may spend as much as $5 billion to fend off RusAl's takeover, Vedomosti reported Thursday. The shares will probably be registered with a Norilsk unit outside Russia, allowing the company to accumulate more than 10 percent of voting shares in line with Russian regulations, the paper said.

The buyback will be funded by selling Norilsk's electricity assets, including OGK-3, Morozov said. The board approved the sale Monday along with the sale of a 1.7 percent stake in OGK-5 to Enel for $106 million, Morozov said.