Anglo American share price spikes on $7bn Vedanta deal reports
Shares in FTSE 100-listed miner Anglo American have spiked today after reports linking it to a $7bn (£5.3bn) deal with Vedanta Resources.
Indian website Livemint reported today that Vedanta was considering a plan to take control of Anglo's South African business by merging it with Vedanta via a share swap.
Vedanta’s chair Anil Agarwal owns nearly 20 per cent of Anglo’s shares through a family trust, Volcan Investments.
Vedanta and Anglo have so far not commented on the reports.
Hargreaves Lansdown mining analyst Nicholas Hyett said he could foresee a potential deal between the pair, if the offer was attractive enough to Anglo’s shareholders.
“It could happen, whether it makes sense depends on the numbers. There will probably be a significant equity component given that Mr Agarwal is a big holder of equity but how that pans out is difficult to see,” he said.
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Ben Davis a mining analyst at Liberum Capital thought that although speculative, Vedanta may be planning a move for the Anglo business.
“Its a tricky one, Agarwal is clearly up to something, but its trying to figure out exactly what. He has clearly got a plan, I just don’t know how you convince Anglo’s shareholders its the right plan,” he said.
Anglo's shares were up by 2.6 per cent today following the news. The price may also be inflated by investors moving away from fellow commodities giant Glencore after its stock fell yesterday following revelations of a potential US corruption probe.
Anglo's South African unit consists of four businesses: Anglo American Platinum,Coal SA, De Beers Consolidated Mines and Kumba Iron Ore.
Read more: Mining group Vedanta rocked by killing of protesters
On Monday Vedanta announced that it was planning on de-listing from the London Stock Exchange, after Agarwal struck a deal to buy out Vedanta's minority shareholders through Volcan Investments, with an offer price of 825p per share.
The offer of almost £800m values the mining conglomerate at £2.33bn.
Vedanta has had a tumultuous few months Its shares plunged in May as it was forced to shut a copper smelter in southern India following deadly protests.