"Time against Xstrata bid for MIM Alex Tilbury 20mar03 A SUCCESSFUL takeover bid for MIM Holdings Ltd is looking less likely the longer the miner holds out to possible suitor Xstrata Plc, according to analysts.
UBS Warburg resources analyst Shaun Giacomo said as time dragged by and the parties remained silent, the market assumed the $3 billion takeover was not going to happen.
"If they had made up their mind to do something they would have tried to do it as quick as they could," he said.
But other pundits questioned whether Xstrata was intentionally holding out as a ploy to drive MIM's share price down.
Daiwa Securities resources analyst Mark Pervan said the longer the due diligence period, the lower the likelihood of a bid from Xstrata.
According to market speculation there have been two unofficial offers from Xstrata around the $1.65 a share mark – valuing the company at $3.3 billion – which had been rebuffed as too low by the MIM board.
Mr Pervan said much of MIM's problems had washed through and the company was comfortable demanding a higher price from Xstrata. He said MIM would be more expensive for Xstrata in six months' time than it was today, given the emerging turnaround in world resources markets.
"All things being equal, time is against Xstrata," Mr Pervan said. "From day one it has struggled with the fact it could not put scrip on the table for MIM. That is causing it the most difficulty."
Almost four months ago, MIM announced it had received an unsolicited approach from rival but equal size Swiss-based mining house Xstrata Plc.
MIM shares rocketed to three-year highs of $1.67 in late January when Xstrata boss Mick Davis made the rounds of Sydney financial institutions. MIM has maintained "talks are continuing", but its takeover premium has been whittled away over time, with MIM priced at $1.47, up 2¢ yesterday.
Depending on how high the market values its assets and future projects, valuations for MIM vary widely from $1.40 to $2.50.
Xstrata – which is 38.5 per cent owned by Swiss metals trader Glencore International AG – needs to diversify from coal which accounts for 80 per cent of its pre-tax earnings.
Xstrata is not be the only candidate ready to run the ruler over MIM's books, with Anglo American, BHP Billiton and Rio Tinto possible merger partners. "
