Shares in Noranda (NRD-T) shot up $2.56, or nearly 12%, to $24.55 in morning trading on Wednesday, after media reports that Brazil’s Companhia Vale do Rio Doce (CVRD), the world’s largest iron miner, planned a takeover of Canada’s biggest miner.
Early on Wednesday, Noranda said it was reviewing "various means of maximizing shareholder value after having received several expressions of interest in the company." The company has also retained CIBC World Markets as a financial adviser in the process.
Noranda’s chairman David Kerr said in a prepared statement, “Noranda has been advised by Brascan that it is fully supportive of Noranda’s efforts to maximize value for all shareholders. The special committee set up by Noranda’s board is considering all courses of action available to the company.”
“The base metals industry has been benefiting from a resurgence of interest given the return to normal pricing for base metals. As we look forward, increased Chinese demand for commodities, lack of supply additions and ongoing consolidation in the base metals industry provide an opportune environment to review our options in order to maximize value for Brascan and all Noranda shareholders,” said Branscan CEO Bruce Flatt.
Rio de Janeiro-based CVRD is looking to boost capacity in the face of rising metals demand from China and Europe, which helped to more than double profit to $1.5 billion last year. Buying Noranda would bring with it a portfolio that includes copper, nickel, zinc, and aluminum assets in North and South America, Europe, Africa, Asia and Australia. The operations employ some 15,000 people in 18 countries.
Noranda’s copper operations include the Altonorte smelter in Chile, a 33.75% stake in the Antamina mine in Peru, a stake in the Collahuasi and Lomas Bayas mines both in Chile (and both via is 59.5% stake in Falconbridge). In Canada, the company owns the CCR and Horne smelters and the Kidd Creek operation.
The company’s Canadian zinc assets include the Brunswick mine and smelter in New Brunswick, and the Matagami mine and General smelting in Quebec.
Noranda is the world’s third-largest zinc producer and the ninth-biggest copper producer.
Noranda owns 59.5% of Falconbridge (FL-T); Noranda in turn is owned by conglomerate Brascan, which has previously said it would like to sell off its 42% stake, preferring instead to focus on real estate, power production and asset management.
Media reports place the value of the takeover bid at $2 billion for Brascan’s share or around $6.5 billion for the entire company. Shares in CVRD were off US$1.47 at US$43.88 in early trading in New York, amid fear on it was paying too high a price.
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