Will Vale Bid for Anglo?

 

Well, it makes more sense than 'one trick pony' Freeport-McMoRan (FCX) (59% of earnings copper, and heavily dependent on its Grasberg pit).

We all know Vale (RIO) is hungry for growth, and that talk about the $15bn stock offering to be used for organic growth isn't fooling anybody. After its failed bid for Xstrata (XSRAF.PK)(Glencore not selling its golden goose), the Brazilians are out there searching for sure. The story linked here in yesterday's Observer (aka the Sunday Guardian) looks like it has a decent amount of gravity and isn't just 100% rumorland. Anglo (AAUK) is also the right size to be a significant purchase. The recent Anglo foray into Brazilian iron ore is telling, too.

This story has legs. It all depends on the price of course, and then there's the regulatory hurdles, not least of which being the Brazilian gov't. But right now I'd say RIO would be odds on to be successful if it went for a formal bid.

Disclosure: No position in any stock mentioned.

Comments

[timfogl:]

How about PCU...value about 32B...about right?

2008 Jun 16 10:42 AM

[swaps:]

I have a position in AAUK and a a takeover bid would allow me to cash in and re-invest in smaller gold companies like Kinross gold which have gone up farther for me this year.

2008 Jun 17 12:28 AM