Freeport, Teck, Grupo Mexico Likely M&A Targets, Bernstein Says

Oct 7 (Bloomberg) -- Freeport-McMoRan Copper & Gold Inc., the world’s biggest listed copper producer, Teck Resources Ltd. and Grupo Mexico SAB are likely takeover targets for rival mining companies, according to Sanford C. Bernstein & Co.

"The mining industry is enjoying a period of exceptionally strong cash flows as a result of relatively high commodity prices,” Paul Galloway, a London-based analyst at Bernstein, said today in a report, citing 13 possible targets. "The industry’s balance sheets are also relatively un-geared compared to historical levels.”

Commodities companies, including miners, oil producers and chemical makers, have announced $413 billion of takeovers so far this year. BHP Billiton Ltd., the world’s biggest miner, made a $40 billion hostile offer for Potash Corp. of Saskatchewan Inc. in August, which would be the largest takeover in the commodities industry since Rio Tinto Group bought Alcan Inc. in 2007, according to data compiled by Bloomberg.

Freeport, which has a market value of $44 billion, is a likely target given it’s the biggest publicly traded copper producer, Bernstein said, adding that the cost of a takeover may deter bidders. Chile’s state-owned Codelco is the world’s largest copper miner.

Teck Resources, Canada’s biggest diversified miner, is also an attractive target given its coking-coal assets, according to the report.

Grupo Mexico, the nation’s largest mining company, Ivanhoe Mines Ltd., Cameco Corp., Alcoa Inc. and Cliffs Natural Resources Inc. are other possible acquisition targets, Bernstein said. BHP, Rio Tinto and Brazil’s Vale SA are all potential acquirers, it said.