RIO - Rio Tinto

reece55 said:

Anyone still riding this one????

Rio has leaped through that $80.00 on high volume (however that doesn't really mean much at the moment with every other stock on the ASX universe surging!).

Today, it opened at about $83.00 and the rest of the day it was heavily traded upward, although was sold off towards the end of the session. Next stop for this one is the $90.00 area. IMO, with metal prices the way they are and the flow of money coming in before June 30, this cash cow should continue on its merry way. Brokers target prices are all the way up to $100 - not sure we will get there, but bullish outlook IMO never the less.

Cheers
Reece

Click to expand...

Took profits yesterday, ahead of my planned exit, but i exited everything in stocks yesterday.

Copper looking toppy....but what do i know...lol!

Cheers,

CanOz said:

Took profits yesterday, ahead of my planned exit, but i exited everything in stocks yesterday.

Click to expand...

Second guessing the plan?
It could cost you next time...

nizar said:

Second guessing the plan?
It could cost you next time...

Click to expand...

Just a combination of things, copper price included. You know, i see why Wayne likes futures, aside from my worst experience they're much more stable in a trend.

Coffee doesn't care what Wall St. is doing.

Cheers,

Got back into Rio today, good solid trend in copper now...see if i can hold a bit longer this time.

Cheers,

What is happenning to RIO today?

It is surging ahead. Up $3.50 to over $86.50 today. A surge of over 4%!!

high of $87.69... its within a whisker of its all-time high..

there's no news sensitive enough for a surge either, what a joke -_-

BHP takeover ? ... well maybe not - ACCC may have some concerns...

may have been discussed elsewhere but given the value companies are creating from spinning of next to nothing U tenements makes you wonder whether private equity is eyeing BHP, RIO ? there was an article a while back suggesting these conglomerates were not generating the returns they could if they were split into spearate companies based around the commodity types..

is this a possibility or totally unrealistic given share structure/holders, finance required etc?

BHP, Rio vulnerable to private equity
Citigroup release private equity risk rankings

By Charlie Corbett
Wed 02 May 2007

Resources giants BHP Billiton and Rio Tinto have topped a list of Australian companies most vulnerable to private equity takeovers.

The rankings were released this week by Citigroup Research, which also included energy firm Santos, explosives maker Orica, leisure group Tabcorp, miner Zinifex, retailer Coles Group and Woodside Petroleum in its top 10 most vulnerable.

http://www.investordaily.com/1802.htm

Private equity don't touch mining...in fact they have no expertise in running mining operations...not a single private equity firm has taken over a mining company, its always mining/mining company mergers.

Punter said:

Private equity don't touch mining...in fact they have no expertise in running mining operations...not a single private equity firm has taken over a mining company, its always mining/mining company mergers.

Click to expand...

Unless of course you look at Glencore International and its tie up with Xtrata, Minara, et al..... and also there is Gilbertson trying for Consmin..

thanks kennas - you've got the world at your fingertips... so do you think this could explain the rises in BHP RIO in last two days - or am i giving investor daily too much credit - anyway i don't think this is a new idea?

what do you think are the chances of such a bid?

56gsa said:

thanks kennas - you've got the world at your fingertips... so do you think this could explain the rises in BHP RIO in last two days - or am i giving investor daily too much credit - anyway i don't think this is a new idea?

what do you think are the chances of such a bid?

Click to expand...

I doubt the two biggest miners would go. Maybe too much debt associated with transaction, and complications in then breaking them up. Would be mighty audatious of private equity. For BHP, maybe one of the big oilers with private equity assist. The oiler could take the oil and gas assets and private equity spin off the other divisions, or sell them to other parties. Maybe. The next tier players would be easier of course. WPL, NCM, STO, OXR.

The speculation could have been the rise. I heard that there was a lot of overseas buying on Friday. (Thanks Sam)

Has surged up over $4 today! Amazing!

Is private equity stalking RIO in order to breakup and make a fortune from this undervalued company?

With Iron ore mining to massively increase and the share on a PE of around 10 this company is way undervalued!

Maybe BHP is about to launch a takeover bid?

Something is sure happening now over $91 a share

1309 [Dow Jones] BHP (BHP.AU) would be most likely bidder for Rio (RIO.AU) in takeover scenarios analysed by Citigroup. "Rio Tinto's strong cash flow and nominal gearing may bring it into the crosshairs of private equity, but we think BHP Billiton is a much more likely bidder given synergies and nationalistic control issue of Australian assets," says broker. Says deal is highly earnings accretive using conservative assumptions, with main consideration being concentration of iron ore/coking coal market shares and lack of BHP CEO elect. Adds acquirer could unlock 40% discount that RIO trades at A$117/share sum-of-parts valuation. Says 30% premium seems to be benchmark market expectation for takeover. Keeps BHP at Hold with A$33/share price target. Keeps RIO at Buy with A$94 target. BHP up 2.4% at A$31.33, RIO up 2.8% at A$89.25. (DWR)

A report from Citigroup late last week rated the top ten Aussie companies most vulnerable to a takeover from private equity or a competitor. "Resources giants BHP Billiton and Rio Tinto have topped a list of Australian companies most vulnerable to private equity takeovers. The rankings were released this week by Citigroup Research, which also included energy firm Santos, explosives maker Orica, leisure group Tabcorp, miner Zinifex, retailer Coles Group and Woodside Petroleum in its top 10 most vulnerable.

Despite Rio Tinto being the 2nd biggest miner in the world, its valuation is lower compared to smaller miners in Australia, UK or Canada. In my view, this is unjustifiable, fair value is AUD200 according to my calculation, while current share price is only AUD89. I believe private equity had discovered this mispricing too, hence Rio is the target of buyovers by private equity now. One way to unlock this mispricing opportunity is to buy up the whole company, break it up into parts, and sell to the market again.

I had bought more Rio Tinto last Friday, doubling up my holdings on this stock, on the back of higher base metal price and rumours of buy-over by private equity. Though I do not believe that private equity are big enough to buy over this mining giant, the rumour alone is sufficient to push the share price higher.

Rio Tinto director had bought more shares recently in the early May07.

http://www.wabusinessnews.com.au/en...urge-amid-take-that-BHP-could-make-a-tilt/dba

Rio shares surge amid speculation that BHP could make a tilt
7-May-07 by AAP

Shares in Rio Tinto Ltd surged above $90 for the first time today amid speculation that BHP Billiton Ltd could take out its rival in a $122 billion-plus deal.

The stock closed up more than five per cent after Citigroup analysts fuelled takeover talk about the company.

Citigroup said while Rio Tinto's strong cashflow could make it an attractive target for private equity firms, BHP Billiton was a more likely bidder given the synergies that could be generated.

"Rio Tinto's strong cashflow and nominal gearing may bring it into the crosshairs of private equity, but we think BHP Billiton is a much more likely bidder given synergies and nationalistic control issue of Australian assets," Citigroup said.

"Applying even a modest bid premium means that any party will need to finance $US100 billion ($A121.99 billion)-plus through debt and equity.

"The deal is highly earnings accretive using conservative assumptions, with the major obstacle being concentration iron ore/coking coal market share and lack of BHP CEO-elect."

Rio Tinto shares surged $4.53 or 5.22 per cent to end a closing high of $91.38 while BHP Billiton put on 96 cents or 3.14 per cent to $31.56.

Rio Tinto's closing price gives the company a market value of $105.92 billion.

A union between BHP Billiton and Rio Tinto would create the world's largest producer of coking coal, thermal coal, copper and position the company as the equal largest iron ore producer with Brazilian giant CVRD.

"The greatest gains would be achievable in the iron ore assets in the Pilbara through optimising product specifications, mining fleet, rail distances to the port, etc," Citigroup said.

"Considering the scale and importance of these businesses to both companies, it is hard not to see $US500 million ($A609.94 million)-plus in synergies and cost savings in this area alone."

The brokerage said cost savings and synergies would also be achieved at the Australian coal assets, Canadian diamond mines, product marketing, logistics and global procurement.

Apart from competition concerns, Citigroup listed the lack of an anointed chief executive to replace Chip Goodyear as a major near-term impediment to any bid.

The brokerage said the disposal of non-core assets could overcome the competition concerns.

Citigroup ruled out any interest in Rio Tinto from the major oil companies and suggested private equity would need to team up with an existing industry player like Xstrata to formulate a potential bid.

"From a pure market capitalisation perspective, the major oil companies like BP and Royal Dutch Shell have the size and balance sheet capability to entertain such a transaction, but we do not believe they are interested in returning to investing in the Metals & mining sector after exiting the space in the 1980s and 1990s," Citigroup said.

"Strategic and diversification drivers could prompt other corporates to bid, but ultimately BHPB can pay the most given it has the most synergies to extract."

Jump on to BHP & RIO, they're starting to fire and when they do they are unstoppable, + either one of them may be taken over, i'll laugh if RIO is the one who leads a consortium against BHP lol

But yeah jeez, these things are really blowing out their cylinders, I was tipping CSL to be the first to reach $100, then macquarie, but jeez Rio $92 out of nowhere, just amazing

Today the story of takeover continues, and helps to push the price of this undervalued giant:

Shares of Rio Tinto Group, the world's third-largest mining company, surged as much as 8.4 percent amid speculation it may be the target of a takeover bid.

Rio Tinto shares rose as much as A$7.49 to A$97.19 and traded at A$95.90 at 12:53 p.m. Sydney time on the Australian Stock Exchange.

Citigroup Inc. analysts said May 7 BHP Billiton Ltd., the world's biggest mining company, could afford a $100 billion plus offer for its smaller rival.

``Rumors are that they have knocked back a bid,'' said Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney.``BHP could be part of that mix. It's just a rumor.'' Ian Head, a Melbourne-based spokesman for Rio Tinto,declined to comment on the share gains, citing company policy to not respond to ``market speculation.''

``We have people looking at a lot of different things,''BHP's president of carbon steel Chris Lynch said at a conference in Melbourne today when asked about a bid for Rio Tinto. ``We won't comment on specific potential targets,'' he said.

Disclaimer: Vested in Rio Tinto

Praise the Lord!

If we are dealing with just rumours I think this is very dangerous for the whole market.

When BHP and RIO fall we know what happens across the board.

The all ords plummet... if RIO and BHP have made ground on takeover talk which isn't going to happen it could turn nasty....

The consequences would be that fund managers sell down stocks that they buy according to the index.

Telstra would be hit hard, as that is an index weighted stock for fund managers.

Just a thought.. but everything looks rosey at the moment.

Ken said:

If we are dealing with just rumours I think this is very dangerous for the whole market.

When BHP and RIO fall we know what happens across the board.

The all ords plummet... if RIO and BHP have made ground on takeover talk which isn't going to happen it could turn nasty....

The consequences would be that fund managers sell down stocks that they buy according to the index.

Telstra would be hit hard, as that is an index weighted stock for fund managers.

Just a thought.. but everything looks rosey at the moment.

Click to expand...

Got to agree with that Ken ................ I'm just a bit suspicious about this "takeover" being "the real deal", especially when it happens right at the May-June time of year which is historically known as a precurser to a market drop ............. Any one else considered the insto's might be ramping this up to offload a lot of stock at inflated prices prior to the "down season"? ............. Maybe I'm just being skeptical ...................... both RIO and BHP were traded like spec stocks today ................ Interesting stuff.