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Fresnillo Up 5% On Slim Takeover Rumors

Tyler Durden's picture




 

After Zero Hedge posted the King World News update that Carlos Slim may be looking at (re)entering the silver market fray by acquiring Fresnillo yesterday (following a comparable rumor spread some time ago by none other than the Daily Mail, which of course meant it was going to be bogus), the stock is reacting appropriately and has moved violently to the upside, 5% higher at last check. The FT, which has chimed in on this development this morning, believes that the Mexican billionaire may need to bid a hefty premium for the $19 billion company.

Now, Slim would certainly have to pay a hefty price to take control of Fresnillo. The company is currently controlled by the Peñoles mining group, which in turn is controlled by another Mexican billionaire, Alberto Baillères.

Baillères also doubles up as Fresnillo’s chairman and has never shown any desire to sell up. That could change, of course, if Slim offered a knock out price but what would that need to be? £25 a share? That would value Fresnillo at almost £18bn. Is that a cheque a shrewdie like Slim would be willing to write?

And while speculation is healthy and all, it is also completely useless. We will follow this one closely as this could just be the M&A catalyst that sends shares in the PM space through the roof.

For those who wish to get acquainted, below we have attached the FRES LN initiation report from Cazenove. Slightly dated, but a great starting point for getting up to speed.

 

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Tue, 01/04/2011 - 07:05 | 846071 Sudden Debt
Sudden Debt's picture

The bigger news today is the new dioxine crisis in lifestock and eggs in Germany that seems to be spreading accros Europe.

 

BLACK SWAN EVENT NR.1 FOR 2011 BITCHEZ!!

Tue, 01/04/2011 - 07:49 | 846083 apberusdisvet
apberusdisvet's picture

 

If this is true it's great news for the Keiser Kammikazes.

Tue, 01/04/2011 - 08:03 | 846089 David99
David99's picture

Bankrupt FTSE went up + 150 points with AAL leading the fraud for the last 5 weeks

Tue, 01/04/2011 - 08:30 | 846131 Cleopatra
Cleopatra's picture

Whoever is looking at Fresnillo, should take a quick glance at PE&OLES* MM.

It's the mexican listed and operating company throughwhich Baillere controls 77% of Fresnillo. It generates almost half of its' EBITDA from activities other than Fresnillo, and has a market cap smaller than its Fresnillo equity stake. With very low debt, the stub of mining activities which generates around 40% of its cash flow trades at negative EV.

Buy Fresnillo at market and get almost another Fresnillo of Cash flows for free....

Just a thought...

 

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