Cliffs Natural Resources (CLF) Gets Pegged as Takeover Target
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With the stock currently trading at a lower multiple than any other $5 billion plus metals or mining company in the U.S. or Canada, a Bloomberg article Tuesday highlights Cliffs Natural Resources Inc. (NYSE: CLF) as an attractive acquisition target.
The company is the largest producer of iron-ore pallets and ships a large sum of the natural resources needed for the production of steel in China and other Asian countries. Analysts forecast the company will report record sales in 2012.
Following the merger between Glencore International Plc and Xstrata Plc, Bloomberg believes BHP Billiton Ltd. (NYSE: BHP) or Rio Tinto (NYSE: RIO) may be interested in acquiring Cliffs. The company is trading at 6.4 times free cash flow over the last year, well below the average of 23.5 times -- where most similarly-valued mining companies trade.
Both BHP and Rio Tinto currently receive roughly a quarter of total revenue from China; last year the nation consumed more iron ore than all other countries in the world combined. Over the last five years, China has more than doubled imports of iron ore.
Analysts sees a 30 percent premium for Cliffs needed to acquire the company. The company is valued at $10.7 billion based on Monday’s closing price.
Shares of Cliffs Natural are up more than 2 percent ahead of the opening bell.
The company is the largest producer of iron-ore pallets and ships a large sum of the natural resources needed for the production of steel in China and other Asian countries. Analysts forecast the company will report record sales in 2012.
Following the merger between Glencore International Plc and Xstrata Plc, Bloomberg believes BHP Billiton Ltd. (NYSE: BHP) or Rio Tinto (NYSE: RIO) may be interested in acquiring Cliffs. The company is trading at 6.4 times free cash flow over the last year, well below the average of 23.5 times -- where most similarly-valued mining companies trade.
Both BHP and Rio Tinto currently receive roughly a quarter of total revenue from China; last year the nation consumed more iron ore than all other countries in the world combined. Over the last five years, China has more than doubled imports of iron ore.
Analysts sees a 30 percent premium for Cliffs needed to acquire the company. The company is valued at $10.7 billion based on Monday’s closing price.
Shares of Cliffs Natural are up more than 2 percent ahead of the opening bell.
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