Norilsk says LionOre break fee is too high

As it contemplates its next move in the bidding war for LionOre Mining (LIM-T, LMGGF-O), Norilsk Nickel (NILSY-O, MNOD-L) is complaining that the $305-million break fee attached to Xstratas (XTA-L, XSRAF-O) latest offer restricts competition.

The break fee is worth 4.9% of Xstratas $6.2-billion bid.

Xstratas initial $4.2-billion offer came with $131-million break fee worth 2.8% of the bid.

Norilskss general director Denis Morozov says the fee is unreasonably high.

This high level of break fee is clearly inconsistent with corporate governance trends aimed at encouraging a healthy bidding process to maximize shareholder value, and does not encourage a level playing field for all participants, Morozov said in a statement.

Break fees are typically about 3% of a transactions value, but there is no official rule.

Norilsk has until May 25 to make a counter offer for LionOre. The company made an earlier bid of $5.3 billion or $21.50 per share, but that offer was trumped by Xstratas $25-per-share offer yesterday.