When the US lifted sanctions on United Co. Rusal, the conditions imposed on billionaire Oleg Deripaska provided relief for rival Russian tycoon Vladimir Potanin.
The two magnates have waged a decade-long battle for control of Russian mining giant MMC Norilsk Nickel. That feud would appear to be over as the US Treasury forces Deripaska to relinquish his hold on Rusal, the second-biggest shareholder in Nornickel after Potanin’s Interros Holding Co. Now Potanin has a freer hand to chart a course for the nickel and palladium miner without his nemesis pursuing a mega-merger with Rusal.
There are currently no plans or discussions at Nornickel to change its relationship with Rusal and the company is still studying the Treasury’s agreement, according to a person familiar with the matter, who asked not to be named because the matter is confidential.
Spokesmen for Rusal and Nornickel declined to comment.
"Life for Potanin in Nornickel will be much easier now," said Oleg Petropavlovskiy, analyst at BCS Global Markets. "Sanctions against Rusal put the end to the war between Potanin and Deripaska."
Deripaska has cut his holding in Rusal, and under the terms of the Treasury deal can no longer appoint members of the No. 2 aluminum producer’s board. That means Rusal still owns about 28% of Nornickel, but there is less pressure on Potanin.
Theoretically, the sanctions relief deal could open the way for Potanin to buy out Rusal’s stake in Nornickel. The last of several attempts was a $12.8-billion bid in 2011. All of them were rebuffed by Rusal’s Deripaska-controlled board, even as minority investors in the aluminum company -- Viktor Vekselberg and Mikhail Prokhorov -- supported the sale.
There was a break in hostilities in 2012, when Rusal, Interros and a group of investors led by Roman Abramovich signed a shareholder agreement blessed by President Vladimir Putin. The conflict resumed early last year after Abramovich got the right to sell out. Rusal threatened to use a so-called shoot-out option with Interros -- a duel between the two investors that would have seen the winner pay a premium for the other’s shares -- before sanctions halted Deripaska’s empire building.
While the sidelining of his opponent may provide an opportunity to buy Rusal’s Nornickel stake, Potanin may ultimately prefer to bide his time, building his own 34% holding slowly in the market, said Boris Krasnojenov, head of research at Alfa Bank in Moscow.
"Having no pressure from Deripaska, Potanin may chose to do nothing and just work with Rusal representative in the board," said Krasnojenov, adding that he’s never wanted to hold more than 50% of Nornickel.
Nornickel shares were trading at a record high on Thursday, after gaining 2.9% to 13 639 rubles the previous day. That valued the company at 2.17-trillion rubles.