Anglo white knights may fancy Xstrata more 25 Jun 2009 Brazil s Vale or a Chinese group are possible alternative suitors for Anglo American if the South African miner opts for a whiteknight defence against Xstrata s unsolicited approach. The snag is that they might be more interested in Xstrata's collection of commodities.
Anglo suitors face rocky ride in South Africa 24 Jun 2009 Xstrata s proposed merger with its mining rival would face limited formal regulatory barriers. But South Africa s government has levers to frustrate any proposal it dislikes. Recent foreign moves on national icons may only encourage politicians to demand a pound of flesh.
Xstrata letter won’t be enough to bag Anglo 24 Jun 2009 The miner has published its merger of equals approach to Anglo, detailing annual synergies of at least $1bn. The industrial case is reasonably attractive. But unless Xstrata dangles some sort of premium, it s hard to see how it can entice Anglo into talks.
Anglo rejection shouldn’t be a final no 23 Jun 2009 Xstrata s idea of a merger of equals was totally unrealistic. But a deal has strategic merit. So while it s totally legitimate for Anglo to fight for better terms, it shouldn t dig in its heels so deeply that it torpedoes the chance of getting together.
Anglo-Xstrata poses management dilemma 22 Jun 2009 With Anglo s CEO Cynthia Carroll reportedly under fire from her own shareholders, the assumption is that Xstrata s dealhungry boss Mick Davis would run the enlarged miner following any deal. But a quick glance at their performance suggests the case isn t so clear cut.
Xstrata can afford decent premium for Anglo 22 Jun 2009 The UKSwiss mining group has proposed a merger with South African rival Anglo American. But it could structure an allshare deal to pay a chunky premium to Anglo shareholders and still create value for its own investors. Breakingviews.com s calculator shows how.
Xstrata/Anglo merger-of-equals is a tough sell 22 Jun 2009 Miner Xstrata has put a friendly face on its proposed $70bn mergerofequals with South African rival Anglo American. But Xstrata is really seeking to capitalise on Anglo s weakness. With Anglo wary of a tieup and a hostile deal tough, Xstrata may have to prepare for a bear hug.
China’s threat to BHP-Rio venture limited 19 Jun 2009 The iron ore deal which scuppered a tieup between Rio Tinto and China s stateowned Chinalco will almost certainly face regulatory scrutiny. But the joint venture looks unlikely to be blocked. Any sanctions China could impose on BHP and Rio could be selfharming.
Rio/BHP now need to watch out for Australia 8 Jun 2009 The joint venture between the two miners will strengthen their bargaining power visàvis their biggest customer, China. But shareholders shouldn t celebrate too enthusiastically. The Australian authorities may gobble up a big share of monopoly profits via higher royalties.
Rio’s new deal gives shareholders partial victory 5 Jun 2009 The AngloAustralian miner deserves plaudits for choosing a $15bn rights issue over a pact with a Chinese stateowned firm. But to get a further $6bn, Rio has had to put its best iron ore assets into a joint venture with archrival BHP Billiton a venture it doesn t control.
BHP Billiton comes out on top in Rio deal 5 Jun 2009 For a while, the AngloAustralian miner seemed unable to profit from having a strong balance sheet in a crisis. But painfully indebted Rio Tinto has now turned to its rival for help. BHP gets what looks like the upper hand in a big joint venture at an attractive price.
Rio snub is latest Chinese setback in global M&A 5 Jun 2009 The Chinese are great at selling to foreigners, but seem to have trouble buying. Chinalco s inability to pay Rio Tinto s $19bn is the latest example. It follows bad investments in Fortis and Blackstone. The problems: naïveté, poor communication and Beijing s alltoovisible hand.
Rio Tinto right to pursue plan B 4 Jun 2009 After a sharp rise in the miner s share price, the terms of the $19bn cash injection from Chinalco clearly gave too much to the Chinese. Rio can now pursue a megarights issue. It should mine shareholders as much as possible, before turning to cashrich rival BHP Billiton.
Chinalco’s softening on Rio deal is small progress 21 May 2009 The Chinese aluminium group is reportedly willing to rejig its $19.5bn tieup with miner Rio Tinto. This reflects the fact that Rio s shares have shot up since the deal was proposed, and shareholders are unhappy with the transaction. But the mooted concessions are unimpressive.
Rio Tinto should line up mega rights issue 21 May 2009 The miner s value is up nearly 50% since a $19bn cash injection with Chinalco was agreed in February. A $12bn rights issue, plus asset sales or a dividend cut, is now clearly preferable to the deal with the Chinese group. Regulators may even hand Rio an excuse to change tack.
Rio Tinto price-cut chatter is embarrassing 8 Apr 2009 Reports the mining group offered Asian customers a 20% temporary price cut look bad just when Rio is schmoozing China for $20bn of new capital. The reality is probably more benign but it shows the minefield Rio faces in cozying up to its biggest customer.
Rio Tinto concedes Chinalco isn’t the only way 26 Mar 2009 It s reassuring that the AngloAustralian miner has a Plan B in case regulators or shareholders block its $19.5bn tieup with Chinalco. But a public discussion suggests Rio s management is privately reconsidering, especially as the Chinese put option now looks less appealing.
Rio Tinto gets chance to offer olive branch 17 Mar 2009 The AngloAustralian miner has named Jan du Plessis as its new chairman. Investors disgruntled with Rio s plans to raise capital from Chinese miner Chinalco shouldn t get too excited, as he s firmly committed to the deal. But it may be easier for du Plessis to rewrite the terms.
Rio’s Chinalco deal suits buyers’ market 9 Mar 2009 The miner s board should have raised equity when it had the chance. Rio s pact with Chinese miner Chinalco was a poor alternative. But markets have weakened for both commodities and capital. The deal doesn t look so bad. At least Rio s shareholders get a quasiput option.
Australia shouldn’t put up Chinese walls 24 Feb 2009 Chinalco s $19.5bn investment into Rio Tinto has sparked a row over Chinese ownership of prized mining assets. Australia might try to block the deal, or impose proAustralia restrictions. It should do neither. Shareholders should decide whether to sell to the Chinese.