According to Bloomberg, Brazilian mining giant Vale (RIO) is planning to raise $15 Billion via an equity secondary offering. While Vale hasn't detailed exactly how they are planning to use this massive amount of capital, there's a decent bit of speculation out there that believes VALE would use this money along with their balance sheet cash (fyi, as of their March '08 qtr RIO had about $2.3 Billion in cash) + possible debt financing to ACQUIRE any one of the possible 3 companies :http://www.bloomberg.com/apps/news?pid=20601087&sid=a3kZLKF7MRkE&refer=home
1.) Anglo American (AAUK) - $85 Billion marketcap
2.) Freeport McMoran Copper & Gold (FCX) - $46 Billion mcap
3.) Alcoa (AA) - $35 Billion mcap
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* The share sale (secondary) would be the biggest ever for Rio de Janeiro-based Vale, with proceeds equal to about 9% of the company's marketcap of about $170 billion.
* Brazil's O Estado de S. Paulo newspaper, citing people connected to Vale, said the company is mulling a bid for Anglo American Plc, Alocoa Inc. or Freeport-McMoRan Copper & Gold.
* "It would make sense for Vale to make a new acquisition,'' said Daniel Gorayeb, mining and metals analyst with Sao Paulo- based broker Spinelli SA. "Vale has spare cash following the iron-ore price increase and needs further scale in a very competitive market.''
* Freeport, based in Arizona, is the world's 2nd largest COPPER producer + world's largest Molybdenum maker. Alcoa, based in New York, is the world's 3rd largest ALUMINUM producer. London based Anglo American produces platinum and other industrial metals.
* Chief Executive Officer Roger Agnelli said last year Vale would invest a record $59 billion to expand production capacity and add projects into 2012. In April, Agnelli said the company will seek new acquisition targets, which wasn't included in the investment plan.
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Anecdotally, consider me a BELIEVER of this story as it supports my Long Term investing THESIS in FCX. To clarify, I believe FCX is TOO attractive of a commodity player to NOT eventually receive a takeover bid at a sizable premium...just a matter of time before it happens. Please refer to my 3/26/08 post titled 'Fearless FCX + The Inevitable' for some more background on why I believe FCX will eventually get a bid.
On a side note + even if FCX does indeed receive a bid, I'm not exactly sure on whether or not the U.S. Justice Department would allow a $40-60 Billion OVERSEAS takeover. However, since I'm a seller on NEWS of the BID and NOT on the actual CLOSING of the deal, this Justice Dept tidbit doesn't really matter to me + my FCX investing thesis !
Data Courtesy: Bloomberg
Full Disclosure: I own shares of FCX.
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