This view by Paul Gait, a senior analyst of research house Bernstein, is already gaining traction amongst various business media and from other analysts.
He told the Australian Financial Review that Glencore’s billionaire CEO Ivan Glasenberg could try to snap up South32 within three months of the anticipated float date in June.
South32’s new Perth-based management were not expected to have “enough time to react” to such a move.
“People are not expecting it,” Gait said.
“It is just too surprising that you would demerge and three months later you’re an acquisition target. It’s all a bit too sudden, a bit too swift and a bit too brutal. But I look at it and go – surely that’s bread and butter for Ivan Glasenberg.
“It’s a tactical window, where Ivan might be able to step in and, while the focus is elsewhere, actually pick up that package of assets at a reasonable price.”
Glencore’s regard of South32 – which will own aluminium, silver, thermal coal, manganese and nickel operations along with the Dendrobium, Appin and West Cliff longwall mines in the Illawarra region – is not questioned.
“Glasenberg’s interest in the South32 assets is already well documented – he was kicking the tyres on some of them before the Big Australian opted for a float instead of running a series of separate trade sales,” the newspaper claimed.
According to Bloomberg, Glasenberg told reporters in September that South32 had a “good set of assets”.
James Santo, an equity sales specialist at broker Aviate, believed the South32 assets could be worth more outside the BHP portfolio.
“Particularly in the hands of someone like Glencore, who are already dominant in all of the core commodities that South32 produces,” he told the newswire.
While Glencore has a zeal for achieving operational efficiencies, with management claiming it had added $240 million of net present value to the vast Clermont mine within 14 months of acquiring from Rio, Gait flagged that Glencore could also decide to shut down the less favourable South32 assets.
“You could be buying it to take the best portions of the asset base, and shutter in the rest of it,” he told the Australian Financial Review.
"Which would be the typical consolidation play. If you were absorbing South32’s coal portfolio, you might look at how you would take production out of the market.”
The X2 Resources mining venture, headed up by former Xstrata CEO Mick Davis and Xstrata chief financial officer Trevor Reid, is also tipped to be a possible suitor for South32.
Glencore, BHP Billiton and X2 have all declined to comment on possible South32 takeover interest.
