Yesterday, Rio posted its biggest single-day gain in seven years during a frenetic day of trading, its shares hitting a high of $A99.69 – a rise of 11% – before ending the day up $5.80 at $95.50.
Rio’s terse response late in the day to an Australian Securities Exchange price query, in which it said it was unaware of any takeover approach from BHP, did not translate into a tempered session in London when the LSE opened up soon after.
Instead, the market responded by pushing Rio’s shares from their opening price of £33.05 to a high of £39.40, a gain of 19.2%. Selling late in the day saw Rio close at £36.60, an overall gain of 10.7%.
Just as trading was starting on the LSE, London-based analysts Numis Securities told its clients a bid for Rio by BHP would not only be expensive, but would also hit strong regulatory opposition.
“Reports of a potential bid by BHP do not make great sense to us unless BHP was prepared to sell a large part of the iron ore business to a third party,” Numis analyst John Meyer said.
Meyer said Anglo American would be a much more likely player in any M&A activity amongst the mining giants.
“There would be fewer regulatory issues, the acquirer could extract the required businesses and the company is neatly divided into a number of listed or previously listed entities which could be quickly sold into the market to help finance the next deal,” he said.
“If there is ‘no smoke without fire’, we would look towards Anglo American for the next deal either by or for Anglo itself.”
