Posts tagged Rumours
Iron ore miner Fortescue stock surges on bid rumours
Shares in Australian iron ore miner Fortescue Metals rose 42 percent at one time on Monday said to be on bid rumours, but lost half their gains on doubts and denials.
Shares in Australian iron ore miner Fortescue Metals Group (FMG.AX) soared as much as 42 percent on Monday, forcing Fortescue to issue a statement that failed to extinguish rumours of takeover interest in the firm.
Fortescue shares hit a high of A$2.93 on rumours that BHP Billiton Ltd (BHP.AX) (BLT.L) might make a takeover bid for the company or that Chinese firms might seek to take a stake.
The company, responding to a stock-exchange query, said it knew of no reason for the sudden rise, but left open the door to speculation it might be in talks with BHP or a Chinese suitor.
“The company does from time to time hold discussions with industry entities regarding product supply and investment opportunities which are confidential in nature and there are none that are progressed to a level that could be considered complete,” Fortescue said in its short statement.
Fortescue’s statement cooled the share price, which closed up 21.4 percent at A$2.50.
But fund manager Tim Schroeders, of Pengana Capital, doubted the rumours and said the day’s gains had been magnified by short-covering after a recent steep fall in Fortescue shares.
“I think it’s people grasping at straws,” he said.
“The BHP one can be ruled out plain and simple,” he added, noting that Fortescue was saddled with debt and that BHP had dropped its $66 billion bid for rival Rio Tinto (RIO.AX) (RIO.L) last week partly because of Rio’s indebtedness.
Both Fortescue and BHP declined to comment.
“We don’t comment on market speculation,” BHP spokesman Peter Ogden said.
Fortescue’s volatile shares stood as high as A$13.15 in June, before falling to a low for the year of A$1.16 on Nov. 20.
The company sells iron ore to 27 Chinese steel companies, its largest customer being Baoshan Iron and Steel Co (Baosteel) (600019.SS), China’s(cnmining) top steel maker.