JOHANNESBURG (Business Day) -- Anglo American [Nasdaq:AAUK; LSE:AAL; JSE:AGL] shares jumped 8.4% to a fresh peak of R547 on the JSE yesterday after a UK Sunday newspaper reported Brazilian iron ore giant Vale [NYSE:RIO] was lining up a takeover bid.
Anglo's gain surpassed its March peak of R546.55 and it recorded the exchange's biggest traded value for the day at R2.1 billion ($260.8 million).
Markets have seethed with rumours for the past three years that consolidation would take place in the mining sector and that Anglo American would be a likely target. BHP Billiton [NYSE:BHP; LSE:BLT], Rio Tinto [NYSE:RTP; LSE:RIO] and Xstrata [LSE:XTA] have all been named as likely bidders for Anglo.
The latest rumour on Anglo followed last week's report from Brazilian newspaper O Estado de Sao Paulo that Vale had studied and made informal enquiries about copper and gold producer Freeport-McMoran [NYSE:FCX] and Canadian aluminium producer Alcoa [NYSE:AA], as well as Anglo. In March merger talks between Vale and Xstrata were terminated by mutual agreement.
The Observer, citing unnamed sources, said Anglo was the preferred target and its biggest shareholders would be willing to accept an offer from Vale if it were high enough.
The latest rumours were triggered by Vale's announcement last week that it would raise up to $15 billion through an equity issue. The funds would be used for organic growth, strategic acquisitions and increased financial flexibility.
Vale said it was not negotiating any strategic acquisition.
Asked if Anglo had received approaches from Vale, Anglo spokesman Pranill Ramchander said the group did not comment on market speculation.