Russia: Potanin evokes a merger between Nornickel and Rusal

Russia: Potanin evokes a merger between Nornickel and Rusal

(Reuters) – Russian businessman Vladimir Potanin, Nornickel’s largest shareholder, has said he is ready to discuss the possibility of a merger between the mining giant and aluminum producer Rusal in the face of Western sanctions.

He told RBC television that he sent a letter on Monday confirming his agreement to the opening of discussions “because it would allow the creation of a national champion, it would allow us to further diversify the shareholder base”.

The need to “have increased stability against sanctions” and the need to appeal to the support of the Russian state for certain projects also plead in favor of a rapprochement, he added, specifying that the proposal came from from Rusal management.

Asked by Reuters, Rusal, the world’s largest aluminum producer outside China, did not immediately respond to a request for comment.

Rusal shares listed in Hong Kong ended the day up nearly 7% and in Moscow, its largest shareholder, En+ gained nearly 7% around 11:30 GMT while Nornickel lost just over 4%.

Western sanctions that have come into effect since the Russian army invaded Ukraine in late February do not target Nornickel, the world’s largest producer of palladium and refined nickel, but Britain last week announced sanctions targeting Vladimir Potanin.

At Monday’s closing price, Nornickel was valued around 47.5 billion euros and Rusal 14.6 billion according to Refinitiv Eikon data.

The Kremlin, which has been closely following the development of the round table of the largest companies in Russia for years, declared through the voice of its spokesman, Dmitri Peskov, that it knew nothing of a possible merger project.

Vladimir Potanin owns 36% of the capital of Nornickel, of which Rusal already owns 26%, and he has been its managing director for ten years.

Since Rusal acquired its stake in 2008, major shareholders have repeatedly clashed over Nornickel’s management, its dividend policy and its investment strategy.

Since the start of the war in Ukraine, Vladimir Potanin has already bought Societe Generale’s shares in the Rosbank banking group and acquired 35% of the capital of TCS Group Holding, owner of Russia’s first online bank.

(Reporting by Reuters offices, French version Marc Angrand, editing by Kate Entringer)

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