* Shares are trading at about 12 pct above the offer price
* Analysts view buyback as a technical move
* Severstal wants to cancel 170 million treasury shares
MOSCOW, Feb 29 (Reuters) - Severstal, Russia's second largest steelmaker, said on Wednesday that it would buy back 170 million shares at 390 roubles ($13.43) per share, about 12 percent below their current price, in order to cancel them.
Analysts view the buyback as a purely technical move since Severstal wants to cancel 170 million shares held by its Lybica Holding unit. Lybica obtained the shares in the process of the Nord Gold mining unit separation earlier this year.
"The buyback is purely technical and was expected by the market," said Dmitry Smolin, an analyst with Uralsib.
"We note that all shareholders of Severstal will be able to participate in the buyback, which doesn't make sense at this stage as the current price is higher than buy-back price."
At 0615 GMT, Severstal's shares were trading at 436.3 roubles per share, 11.9 percent above the offer price.
Severstal Chief Financial Officer Alexei Kulichenko said that because of possible share price volatility, minority shareholders could profitably tender their shares if the market price fell significantly, although the purpose of the buyback was to cancel the treasury shares.
"Of course, our goal, as I have already underscored, is to buy back our treasury shares," he said during a conference call.
Severstal shareholders will be asked to approve the buyback at an April 10 EGM. The offer will be open from May 21 to June 19, with settlement expected in early July.
The buyback has a nominal value of $2.28 billion.
Nord Gold, which hopes to achieve output of 1 million gold equivalent ounces next year, listed its GDRs in London last month.