Glencore could consider approach for South32 before spinoff from BHP Billiton
Glencore, the global mining business, could benefit from targeting BHP Billiton’s USD 15bn spinoff South32, the Australian Financial Review reported.
According to the report, London analyst Paul Gait said Glencore could try to buy South32 within three months of its anticipated listing date in June. Gait said that because the move would be unexpected it could work in Glencore’s favour and enable it to secure the asset at a relatively good price. Gait also acknowledged that the idea appears farfetched, but it could be a good tactical move that should not be discounted, given Glencore's penchant for taking the market by surprise.
The report also cited Jason Beddow, chief executive at BHP investor Argo Investments, who said moving on a target such as South32 would fit with Glencore’s profile.
Gait noted that South32 would increase Glencore’s exposure to familiar commodities and grow its geographic footprint.
Gait also argued that buying South32 could make it easier for Glencore to acquire Rio Tinto in the future. South32 would increase Glencore’s size and allow time for Rio’s share price to settle, according to Gait.
Glencore approached Rio last year with a merger of equals proposal.
Australian Financial Review