I guess
CVRD (RIO) has changed its official name to "Vale" but I still call it
CVRD since that's what I've known it for the past few years... either way
"the company" has pulled out of it's deal with Xstrata; which I like. Generally companies in these deals, especially on the acquirer side have an overhang over them so this removes that.
BHP Billiton (BHP) is in the same situation now with its bid for
Rio Tinto (RTP). Smaller deals would not be so hard to digest for the market. In the long run, what these companies own in their mines is incredibly valuable in my "World of Shortages" thesis. But the market capitalizations already reflect this, especially in the "Big 3".
- Brazil's Vale (RIO), the world's largest iron ore miner, said on Tuesday that talks to buy Swiss rival Xstrata had failed and that Vale would look at other potential takeover targets.
- If Vale had succeeded, the deal would have been one of the largest corporate takeovers in history. Some analysts had valued Xstrata at up to $90 billion.
- In preparation for a potential Xstrata takeover, Vale had secured an estimated $50 billion in financing from banks including Santander, HSBC, BNP Paribas, Lehman Brothers, Credit Suisse, Citigroup, Calyon and the Royal Bank of Scotland.
- The recent softening in Vale's share price since its peak in October, despite its securing a hefty 65 to 71 percent price hike from clients for iron ore in the past weeks, was the main reason that the talks failed, a source in London close to the deal said.
Long CVRD in fund; no personal position
