AWC Rumours

Banker sightings prompt takeover talk in the west

• Bridget Carter

12:00AM December 21, 2016
East coast investment bankers from one of the bulge-bracket firms such as UBS, Citi, JPMorgan and Morgan Stanley have been spotted in Perth in recent days, fuelling talk that a major takeover or financing deal in the resources space is being worked on.

While some thought Fortescue Metals Group could be involved, others point to a potential acquisition by South32 of Alumina.

That possibility has been around for some time, and any deal may see JPMorgan advise South32 and Flagstaff offer advice for Alumina.

South32 is understood to have been on the lookout for acquisitions since it was spun out of BHP Billiton.

Alumina was recently the subject of a demerger from Alcoa.

The removal of an effective poison pill, preventing Alumina from being taken over, is said to have made the company a target.

The company is listed on the Australian and New York exchanges after being formed in 2003 via a demerger from Western Mining Corp.

It has a 40 per cent share in a joint venture with Alcoa called Alcoa World Alumina and Chemicals, which mines bauxite and smelts aluminium.

The market value of Alumina is about $5bn, while South32 is worth about $13bn.

South32 recently bought the Metropolitan coal mine from the US-based Peabody Energy for $US200m in a deal advised by JPMorgan.

Other mining companies are said to be eager to embark on an acquisition in the goldmining space.

However, there are said to be limited opportunities.