Potanin a major obstacle to $60 billion Rusal, Nornickel merger

• Vladimir Potanin is most likely to stand in the way of a potential $60 billion merger.
•  the merger will take place between Rusal and Nornickel.
• the combined clout of the two companies would make the West wary of driving up prices.

According to two people with firsthand knowledge of the situation, Russian businessman Vladimir Potanin is most likely to stand in the way of a potential $60 billion merger between Nornickel (GMKN.MM), one of Russia’s largest producers of metals, and Rusal.

In an interview with Russian media, Potanin stated that a partnership may bolster the companies’ defences against any sanctions the West might impose on them. He also stated that he would not resign as CEO.

Given the delicate nature of the subject, the two sources—who asked not to be identified—said that a deal was unlikely to be reached as long as Potanin remained Nornickel’s CEO and largest shareholder.

No deal is feasible, according to one of the individuals, “unless he bites the bullet, resigns as CEO, and sells down his shareholding to become a minority stakeholder.”

Also Read

Evacuations as Russia advances in Ukraine’s Donbas

Sloviansk has been heavily bombarded in recent days as Russian forces advance...

“The UK sanctions on Potanin will result in a de facto global international financing restriction on the companies, even if they are not subject to international penalties.”

Britain imposed sanctions on Potanin last week.

Neither business has been specifically targeted by Western sanctions placed on Russia because of the conflict in Ukraine, although Rusal was until its founder Oleg Deripaska agreed to give up control that was under U.S. sanctions between April 2018 and early 2019.

Both the EN+ Group, the largest shareholder in Rusal, and the Interros Group, which looks after Potanin’s assets, declined to comment. Requests for comment from Rusal were not answered.

Outside of China, Rusal is the greatest producer of aluminium in the world, while Nornickel is the largest producer of palladium and nickel, contributing 40% and 7% of the world’s mined supplies, respectively.

Analysts claim the combined clout of the two companies, the majority of whose customers are in Europe and the Americas, would make the West wary of driving up prices for metals that are essential to its own industries, lending credence to Potanin’s remarks in this week’s interview that a merger could offer shelter from sanctions.

In Europe, energy prices have already reached record highs as a result of efforts by the West to wean itself off of Russian gas.

The London Metal Exchange is investigating the implications of the UK sanctions on Potanin for itself, its users, and the brands of Nornickel that are traded on the exchange.

[emebdpost slug=”russian-fm-lavrov-putin-macron-call-leak-violated-diplomatic-etiquette/”]