Mining’s big guns will return to “oven-ready” Anglo

ANGLO American is tipped to be among the most likely takeover target of European mining stocks, according to a report by Bloomberg News on Monday.

Citing a survey of 50 merger and acquisition experts conducted between January 6 and 17, the newswire said Anglo was picked 12 times as the top target.

A recent report by the Financial Times said BHP was reticent to renew a takeover attempt while Anglo was undertaking a restructuring process of its own. The Australian group made an unsuccessful £39bn bid last year.

Despite this, Anglo was described by JP Morgan Cazenove analyst Dominic O’Kane as digestible and desirable given its high quality copper production.

He said separately in an investment report that “the strategic and economic logic for a BHP-Anglo combination is robust,” although Anglo’s share price carries an M&A premium to his estimate of its fair valuation.

According to Mark Taylor, director of Specialist Sales at Panmure Liberum, Anglo’s restructuring made it an “oven ready” takeover target. It is just a matter of time before mining’s “big guns get the check book out again,” said Taylor.

Broadly, M&A specialists said the mining sector was on the cusp of renewed M&A activity. News that Glencore and Rio Tinto recently discussed a combination perhaps gave evidence of this theme.

“There’s a lot of optimism about a big M&A cycle coming, and event-driven investments are getting attention again,” said Peter Germonpre, co-head of event-driven and special situations at Olivetree Financial. “There’s activity in Europe to create big players.”