MELBOURNE (Reuters) - Glencore Xstrata Plc is unlikely to pounce on OZ Minerals Ltd, a banker who knows both companies well said on Monday, playing down a report in a British newspaper that said Glencore was weighing a 750 million pound ($1.2 billion) takeover offer.
The Mail on Sunday reported that Glencore had acquired up to a 10 percent stake in OZ Minerals, citing City sources, and said OZ Minerals had appointed UBS UBSN.VX as a defense adviser.
OZ Minerals said on Monday it had received no proposal nor any substantial shareholder notice from Glencore. Under Australian rules, any investor directly holding at least 5 percent of a stock must disclose their ownership.
A banker who knows both Glencore and OZ Minerals well doubted Swiss-based Glencore would have any interest in OZ Minerals as Glencore is looking to conserve cash, and said even if OZ was a bargain its assets would not be a good fit.
OZ Minerals owns the Prominent Hill copper mine in South Australia, whose costs are rising as its mine life runs out. The mine’s copper is exported to China, so would not provide any feed for Glencore’s Mt Isa operation.
“There’s no obvious synergy,” the banker said, declining to be identified because he was not authorized to speak on behalf of Glencore.
OZ Minerals’ other key asset is the undeveloped Carrapateena deposit in South Australia, which Glencore would not want as it is selling off some undeveloped copper assets and has made clear it has no interest in spending on new mines.
OZ Minerals is sitting on A$433 million ($403.36 million) in cash, hunting for producing mines that could boost its output as Prominent Hill output declines, while it weighs whether to develop Carrapateena.
“There’s been pressure on them to buy another operating project,” said Mark Hinsley on equity research sales at Foster Stockbroking.
Shares in OZ Minerals Ltd (OZL.AX) rose more than 6 percent to a near five-month high of A$4.71 on Monday after the British report. They then eased to trade up 3.3 percent at A$4.56, valuing the company at A$1.38 billion.
The broader market was down 1.3 percent.
Glencore and UBS declined to comment to Reuters on the Mail on Sunday report.
Reporting by Sonali Paul; Editing by Richard Pullin and Stephen Coates