Glencore in Position of Strength Regarding Mining M&A: Jefferies
Glencore has paid down debt and carried out deals to grow Ebit of marketing division, while keeping a strong balance sheet, Jefferies (buy) says in note.
- Says “cyclical resilience” in marketing and strength in base metals over iron ore puts Glencore in a position of relative strength as regards mining M&A
- Glencore is positioning itself for large-scale mining M&A again, Rio would still be a desirable target, but may be “untouchable”
- Regulatory hurdles and shareholder opposition makes a Rio merger difficult to execute
- Adds that large mergers in the mining sector may be hard for Glencore to pull off
- Expects copper/base metals to outperform iron ore in the next 2-3 years, Glencore should therefore be a beneficiary of positive earnings momentum relative to iron ore miners
- Glencore shares fall 1% in London, down 3.1% in Johannesburg, fell 0.4% in Hong Kong Thursday