Norilsk to Pay $2Bln in Buyback

Norilsk Nickel's board voted Friday to spend up to $2 billion buying back 4 percent of its stock, a decision opposed by one-quarter owner United Company RusAl as it wrestles for a greater say in the miner.

Norilsk said it would buy back up to 7.95 million of its own shares at 6,167 rubles ($253.80) each, a 27 percent premium to its Friday close of 4,855 rubles, in a bid to reinvigorate a share price that has fallen by one-third since May.

"This price drop was impacted mostly by factors that are irrelevant to the company's fundamentals," Norilsk chief executive Vladimir Strzhalkovsky, who assumed the post Aug. 8, said in a statement. He did not say what those factors were.

RusAl, majority owned by billionaire Oleg Deripaska, has been at loggerheads with Norilsk's largest single shareholder, Vladimir Potanin, over the management of the world's largest nickel miner since it bought its stake in April.

Each side has accused the other of attempting to devalue the company's stock.

Mikhail Seleznyov, a mining analyst at Deutsche Bank, said the buyback would be beneficial for minority shareholders, as neither Potanin's Interros holding nor RusAl were interested in cutting their stakes.

RusAl said it had voted against the share buyback and accused Interros of violating corporate governance standards by conducting an in absentia vote.

Norilsk, however, insisted shareholders would benefit from the buyback.

"In the last three years, the shareholders of Norilsk Nickel received more than $8 billion as a result of stock buybacks or buyouts, and in the form of dividends," Norilsk first deputy general director Alexander Popov said.