Russian nickel producer Norilsk is getting a little bit of trader tug-of-war on headlines that it is now formally trying to buy back the 25% of its own shares that rival Rusal owns.
Initially, NILSY （quote） shares spiked on hopes that the nickel giant's offer of $12 billion for the stake could fuel a sort of bidding war. Based on previous valuation, aluminum producer Rusal's piece of NILSY would only be worth around $10 billion to $11 billion, so the bid premium of 9% is solid but unspectacular at first glance. However, NILSY soon retreated again as the magnitude of the boardroom backlash that a failed bid will mean for the company.
Rusal is one of two 25% controlling partners in the nickel concern; investment conglomerate Interros is the other. Relations between the two companies have deteriorated to the point where each has spent much of the last couple of quarters trying to buy its rival out.
This was different in that the offer ostensibly came from NILSY itself, which reveals that Interros has now stooped to using the company itself as a weapon. Rusal immediately rejected the offer, leaving both sides in control of roughly half the NILSY board of directors and even further than ever from a cooperative relationship. Vladimir Putin himself has weighed in on the situation in the past and may yet do so again.
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