re: the facts
BRISBANE, Feb 11 AAP - Investors are stripping the takeover premium from MIM Holdings Ltd shares today as the market worried its suitor Xstrata plc was less likely to make a play. London-listed miner Xstrata said overnight its underlying profits fell 17 per cent in 2002 as it suffered at the hands of depressed coal and zinc prices and the sluggish global economy. The company, which supplies coal for use in electricity generation and ferrochrome to make stainless steel, warned commodity and economic prospects are set to remain tough. But analysts said the results were slightly better than expected. However, the company refused to elaborate on its takeover talks with MIM. Commenting on MIM, Xstrata CEO Mick Davis told analysts "should matters (lead us)...to walk away or do a deal we'll tell you". MIM shares had slumped five cents or 3.5 per cent to $1.39 by 1241 AEDT on 22 million turnover. AMP Henderson Global Investors fund manager Gary Armor said many analysts listened to Xstrata's conference call yesterday and decided its takeover of MIM appeared less likely. "The other thing is the hedge funds have been very short Xstrata and long MIM in expectation of a deal so I think some of them are reversing that position," he said. Mr Armor said the market believed Mr Davis was not interested in MIM which was "exactly what he should be doing if he is going to do the deal". "Bottom line is, he wants to talk it down ... so I still think Xstrata are likely to bid around $1.70-$1.75," he told AAP, a bid that would value MIM at $3.5 billion. Mr Armor said Xstrata needs to diversify its assets away from South Africa. "But the list of potential deals all around the world isn't very long so MIM is a pretty good fit for them and there are synergies in the coal and zinc," Mr Armor, who helps manage $1 billion at AMP Henderson Global Investors in Sydney. Xstrata, the world's fourth-largest coal exporter, has spent at least three months considering a bid for its Australian rival MIM. Neither Xstrata nor MIM have commented since they first announced talks were under way in November. MIM reports earnings on interim earnings on February 17 and has already flagged it'll struggle to make a profit given weak commodity prices. Anglo American, the second-largest mining company in the world and almost 10 times Xstrata based on market value, has also been mooted as a likely contender in any race to own MIM. AAP
