Norilsk offers $12.8 billion for RUSAL's 20 percent stake

（Reuters） - Russian mining giant Norilsk Nickel （GMKN.MM） made a new offer on Friday to buy out warring shareholder RUSAL （0486.HK）, raising the price per share by 23 percent to offer an even heftier market premium.

Norilsk offered to buy a 20 percent stake in itself from RUSAL for $12.8 billion, which would leave the  aluminum giant -- majority owned by tycoon Oleg Deripaska -- with a 5 percent stake, and gave a deadline of March 4.

Norilsk shares extended gains to trade 4.5 percent up on the day at 1550 GMT from around 1.4 percent higher before the news, as investors bet that the offer might just be generous enough to tempt Deripaska to sell.

The offer comes just a month and a half after Deripaska -- locked in a bitter battle over strategy and dividends with Norilsk management and quarter-owner Vladimir Potanin -- refused to sell RUSAL's entire 25 percent stake for $13 billion.

RUSAL, whose shares were closed in Hong Kong at the time of the offer, said its board of directors would examine and discuss the offer.

The market has been looking for a sale of RUSAL's stake to end a long-running shareholder feud at the world's top producer of nickel and palladium.

"The new proposal largely corresponds to RUSAL's position regarding the value of their stake, and there is a good chance that they will agree," said Kirill Chuyko, analyst at UBS.

"The plus is that the conflict will be resolved."

Mikhail Prokhorov, one of Deripaska's co-owners in RUSAL, told Reuters in December that a price range of $12-15 billion would be fair for the 25 percent Norilsk stake.

Norilsk's offer for the 20 percent translates into a valuation of $16 billion for RUSAL's entire stake, according to Reuters calculations. The price also represents a market premium of around 40 percent, based on the current market capitalization of some $46 billion.

The offer comes after Norilsk suspended a multi-billion dollar share buyback, after a court in St. Christopher and Nevis granted an injunction on a challenge from RUSAL.

A source close to the offer told Reuters on Friday that RUSAL shareholders Prokhorov and Viktor Vekselberg, who had been interested in selling when Deripaska said no in December, are still interested in the sale. They could not be reached for comment.

Chuyko said that in the long run, the cost of the buy out, if it goes ahead, would be a negative for the Norilsk share price, as the cost would be borne through lower dividends and higher borrowing.