Eurasian Natural Resources Corp., a producer of metals in Kazakhstan, advanced the most in seven months in London trading after the Sunday Times reported Glencore International Plc was studying a takeover.
The stock rose 4.7 percent to 776.5 pence at the 4:30 p.m. close, the biggest one-day gain since Nov. 4, valuing ENRC at 10 billion pounds ($16.3 billion). Glencore Chief Executive Officer Ivan Glasenberg held talks with shareholders controlling about 45 percent of ENRC and may offer 12 billion pounds, the Sunday Times said yesterday, citing a person it didn’t identify.
“An acquisition of ENRC would significantly bolster the asset base of Glencore,” Collins Stewart Plc analysts wrote today in a note, adding that a full takeover is unlikely to be approved by the Kazakh government. Buying 26 percent of the company from Kazakhmys Plc (KAZ) is “more realistic,” they said.
ENRC fell to a 23-month low on June 10 after shareholders ousted two independent board members and management began a review of governance. Glasenberg has also held talks with the Kazakh government, which holds 12 percent of ENRC, the Sunday Times said, citing a separate unidentified official. The company hasn’t made a formal bid, the London-based newspaper reported.
Glencore, the largest listed commodity trader, rose 2.8 percent to 523.4 pence. Simon Buerk, a spokesman for the Baar, Switzerland-based company, and ENRC officials wouldn’t comment.
“We would see an all-out cash bid near-term from Glencore for ENRC as highly unlikely and the Swiss-based group issuing more equity is not an option for at least six months,” Miriam Hehir, an RBC Capital Markets analyst in London, said today. “Glencore highly values its investment-grade credit ratings, which help to underpin its profitable marketing business, and we do not believe it would jeopardize these ratings.”
Glencore is a potential buyer of Kazakhmys’s stake in ENRC, Liberum Capital Ltd. said in January. Kazakhmys, Kazakhstan’s biggest copper miner, is considering its options, including a possible sale of the stake, CEO Oleg Novachuk said last year.
“Glencore’s trading business would benefit from a significant rise in its market share of ferrochrome and aluminum,” Collins Stewart said. “An acquisition would also provide an entry into iron ore, with assets and exports in Kazakhstan and Brazil.”
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