- Brazilian mining giant Vale (RIO) raised about 19.43 billion reais ($12.17 billion) in a global share offering on Wednesday, building up a war chest to help finance expansion plans and potential acquisitions.
- The company, the world's largest producer and exporter of iron ore, said it priced 189,063,218 preferred shares at 39.90 reais each and 256,926,766 voting shares at 46.28 reais each.
- Vale, formerly known as CVRD, went ahead with the offering despite a recent slump in financial markets that pushed its share price sharply lower.
- When Vale first announced its plans for the offering on June 10, its preferred shares were trading at 48.62 reais and its voting shares at 58.40 reais. On Wednesday, the preferred shares closed 2 percent lower at 42.60 reais and the voting shares fell 1.42 percent to 49.20 reais.
- Vale, one of the world's top diversified mining companies, has said it would use the proceeds from the sale to finance growth in existing businesses and future acquisitions, as stipulated in its current $59 billion investment plan.
- Since Roger Agnelli took over as chief executive in 2001, Vale has completed 14 acquisitions, including the $18 billion takeover of Canadian nickel producer Inco in 2006.
I continue to believe Freeport-McMoRan Copper and Gold (FCX) would be quite a nice addition to it's stable.
[Mar 26: CVRD Pulls Out of Xstrata Deal]
[Feb 19: CVRD (RIO) Secures 65% Increase in Iron Ore Pricing]
Long Vale in fund and personal account
11 comments:
Mark,
CNBC is debating,
"Is the commodity fever over?"
I guess because oil was down 0.004% and gas .001%
Do you think this is a buying signal... How many CNBC appearance of "commodities have peaked" do you look for before buying commodity stocks 34 or 45?
RIO is really getting shafted wth??
Still a bit early. This is only day 2 of the "death to commodities" or maybe 3
In the past this generally takes 1-2 weeks to play out. I did buy a bit of natural gas yesterday but they are throwing it all out today.
Hedge funds have decided the global growth story is over, so for all practical purposes it is. For 2 weeks.
:)
Probably by end of July/beginning of August hedge funds will rotate back in. For now its all about healthcare baby! The new hot and sexy industry. Err, yeh.
Alright, I'll be sure to keep my arsenal ready to fire buys for 3 weeks.
Unlike a certain Meena POLAR investor I don't have unlimited ammo.
Speaking of Arsenal, they are my favorite football club too ;)
RIO actually got their secondary offering done at $29.00 So while it hurts to be a shareholder that is getting hit with a gap down this morning, keep in mind that those who participated in the offering are profitable on their trade.
I was able to get all the stock I wanted from JP Morgan and Credit Suisse which may signal that demand was light, but the fact the stock is trading above the offering price is definitely a short-term positive. I wouldn't be surprised to see it rally into the close.
Zach
Thanks for the info Zach
Just curious why you bought in a placement as opposed in the open market?
That's the focus of my fund - IPOs and secondary offerings. The benefit of being a buyer in the secondary offering is that I actually get the price from the deal (in this case it was $29.00). With secondary offerings they try to price the deal to be profitable, so often the price is below the previous day close. Occasionally it is at the closing price but usually below.
So bottom line is that I usually get a better price that way. The problem for individual investors is that they likely do not have an account with all the different brokers (underwriters) who are offering the stock.
Ah, so today was an anomaly in that the stock actually fell below where the pricing was last night. Got it.
p.s. email me with you you hyperlink your name in the comments section? thanks
ah yes the fun times are back. sector rotation right before our eyes.
J
Can you imagine multiplying today, day after day, for a month+ in a row?
Thats what its like to be a financial, retail, et al investor.
Let's hope its only a week or so. I don't want to know how the other half lives. :)
Here is the awful thing
DUG is up a whopping 3.6%
SMN 1.6%
uhh, thanks for the "protection".
Meanwhile I see name after name down 9-12% on the long side.
They need to flip Exxon out of that DUG and put in more of the smaller E&P names. Talk about a failed insurance policy.
FYI on RIO.
"Rumors that Vale is in talks with any company are baseless. Rumors that Vale has made an offer for Freeport-McMoRan are baseless," Vale's press office said in a statement.
We'll see what happens here...
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