After being rebuffed by Rio Tinto (LON:RIO), Glencore (LON:GLEN) is now eyeing Cliffs Natural Resources’ iron ore assets, the Wall Street Journal has reported.
In August, Cliffs hired banks to sell some US coal assets along with its Australian iron ore mines as it looks to focus on five core US iron ore mines.
According to people familiar with the matter, Glencore held talks with the US company about a month ago. While ‘very preliminary’, the discussions showed that CEO Ivan Glasenberg was not placing all his iron ore ambitions on another attempt at Rio Tinto, the WSJ noted in a report on Friday.
In a bid to expand its iron ore operations, Glencore in August approached Rio Tinto -- the world's second-largest exporter of the steelmaking commodity behind Brazil's Vale SA -- with a takeover offer (Rio Tinto share price jumps as miner rebuffs Glencore merger talk ). The Anglo-Australian miner said last week that it had rejected the takeover approach, snubbing a blockbuster deal that would have created a $160 billion mining and commodities trading giant.
Glencore revealed that it was no longer actively considering a Rio merger, and under UK Takeover Panel rules the Swiss firm is in effect barred from making another approach to the British group for six months
Barron's on Rio prospects
Despite its recent rejection of Glencore’s takeover offer, Rio Tinto could see its stock rise as much as 20 percent in the next year, Barron's said in its latest edition today.
According to the financial newspaper, Glencore's interest could put added pressure on Rio Tinto to increase shareholder returns.
Rio had cut $2.3 billion from operating costs last year and expects a reduction of $3 billion in 2014, Barron’s noted. Capital expenditures were estimated at about $9 billion this year and $8 billion next year, which was less than half the $17.6 billion it had spent in 2012, the newspaper added.
A cyclical trough of weak prices has helped push Rio Tinto’s share price down more than 13 percent so far this year. The London-based company's shares are trading at 9.2 times forecast 2015 earnings, and have traded at a multiple as high as 15 times in the past five years, according to Barron's. As of 09:34 BST, the stock was trading 2.07 percent higher at 3,027.00p. Meanwhile, Glencore’s share price was at 313.34p – 0.35 percent up intraday.
Source: invezz.com
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