Anglo braced for more bids from abroad

ANGLO AMERICAN’S share price recovered from initial losses yesterday on market speculation that China’s Chinalco and Brazil’s Vale could emerge as potential suitors and make a bid for the company.

Investors had started to dump their Anglo shares, following its rebuttal of rival miner Xstrata’s all-share, nil-premium bid for it earlier this week.

“We were surprised to read Anglo’s somewhat aggressive response regarding the proposed combination’s ‘lack of strategic merit’,” Anindya Das at Nomura said yesterday.

“Our conversations with many Anglo shareholders over the past two months regarding the potential merits of such a combination certainly do not give us the impression that shareholders see little strategic merit,” he added.

He also said that many shareholders would prefer a more open dialogue between Anglo and Xstrata’s management teams.

But Anglo’s decision to rebuff Xstrata – lead by its chief executive Cynthia Carroll  – could eventually lead to a better offer, other analysts said.

Over a year after Vale stopped talks with Anglo on a merger which would have created the world’s biggest mining group, Xstrata’s proposed “merger of equals” may stir up interest in Carroll’s company from other groups, analysts say.

Both Chinalco – recently spurned by mining giant Rio Tinto in favour of a rights issue and a joint venture with BHP Billiton – and Vale dismissed the suggestions as “market speculation”.