ssb regular comments, page-4

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