That hoary market rumour of Oxiana being snapped by an acquisitive world major miner, like Xstrata, resurfaced late yesterday, sending the share price up by more than 7% or 24C.
Oxiana is about to enter a ‘merger of equals’ process with Zinifex that aims to produced a company with a combination valuation of $12 billion, give or take a dollar or two.
But a spoiler bid has been rumoured for some weeks, with some institutions in Oxiana and investment banks trying to unsettle the deal by bagging the zinc mining side of the deal: i.e. the valuation attached to Zinifex.
Whether a bid comes is another thing, but Oxiana itself was long a speculated candidate for merger talks and then a deal with a host of miners, including Zinifex.
Those talks came to fruition while the likes of Xstrata have continued to try and buy Australian coal assets (Pacific Resources), nickel and then had a failed attempt to merge with the world’s leading iron ore miner, Vale of Brazil (ex CVRD). Xstrata is also talking to Maccarthur Coal about a possible deal, but the talks have not progressed.
The rise in Oxiana shares in the afternoon was the largest since March 19 with 31.7 million shares were traded; almost double the stock’s daily average in the past six months.
Bloomberg said that Xstrata plans further acquisitions, according to a Swiss newspaper,, Finanz & Wirtschaft said yesterday, citing chief executive Mick Davis.
Xstrata ended the merger talks with Vale in March and has spent more than $US27 billion on acquisitions since 2002, most notably in Australia (Mount Isa Mines was the largest, along with coal and nickel, plus nickel in Canada with Falconbridge).
Oxiana offered 3.1931 of its shares for each of Zinifex’s on March 3 in the long awaited marriage.
The deal values Zinifex at $5.2 billion. Oxiana produces copper, gold, zinc, silver and lead from mines in Laos and Australia.
Zinifex produces mainly zinc, some lead and a bit of copper; it is completing a takeover for Allegiance Nickel.
Oxiana’s most prospective asset is the Prominent Hill project in South Australia. The $1.08 billion mine is due to start producing in the last few weeks of this year, but OXR is already planning a significant expansion after finding more resources.
