Shares in Russia's Nornickel up as it sets high price for buyback

MOSCOW: Russian metals producer Nornickel said on Tuesday its board of directors had approved a buyback of up to 3.4% of its shares for $2 billion, sending its Moscow-listed shares higher.

Major shareholders at Nornickel, a leading nickel producer and the world's largest producer of palladium, proposed the buyback to the board earlier in April, in partial compensation for a smaller than expected final dividend.

"The board of directors believes that the company is currently undervalued by the market, which presents a good opportunity to run a share buyback," Gareth Penny, board chairman, said in a statement.

Nornickel will cancel most of the shares it purchases during the buyback, excluding 0.5% to be kept for employee incentive purposes, he added.

The buyback price of up to 5,382,865 of shares is set at 27,780 roubles ($370.90) per share, Nornickel said.

Its shares in Moscow rose by 1.9% to 26,940 roubles per share after the statement.

All shareholders may participate in the buyback between May 20 and June 18. The payment is expected by July 3.

Two of Nornickel's major shareholders - Interros and Rusal - did not reply to a Reuters' request for comment on whether they would take part in the buyback.