Australian Financial Review PUBLISHED: 10 Mar 2011 12:00 (Online) Broker Watch Gillian Tan
Macquarie has lifted Extract Resources to "neutral" following the possible cash offer from CGNPC Uranium Resources for Extract Resources' major shareholder, Kalahari.
The broker lifted its target price to $10.82 from $9.
"By CGNPC acquiring control of Kalahari, the 20 per cent threshold for making a takeover for Extract would be exceeded," said the broker. "Interestingly, a CGNPC offer could force Rio's hand if it wishes to gain control of Extract's Husab project in order to capture operational synergies."
Analyst Martin Stulpner notes a key risk to the call is the non-matrtialisation of an offer.
BMO Capital Markets, RBC Capital Markets and Haywood Securities - ranked joint first by Bloomberg - hold "speculative outperform", "outperform" and "sector outperform" recommendations, respectively, with RBC Capital Markets believing the stock could reach $13, higher than consensus target price of $10.20.
Australian Financial Review PUBLISHED: 10 Mar 2011 11:55 (Online) Talking Stock Jamie Freed
QUOTE
"But Rio is likely to use some of its cash for deals, with its $3.9 billion bid for Riversdale Mining still outstanding. It is also in talks with Extract Resources about a uranium joint venture in Namibia. But after a Chinese group announced plans to bid for Extract's largest shareholder, Kalahari, Rio could be dragged into another takeover battle."
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