Shares in Anglo American rose nearly 3% on the London Stock Exchange on Monday, rallying on speculation that the world’s third-biggest mining company would receive an $80 billion takeover bid from rivals intent on breaking it up.
Anglo (nasdaq: AAUK - news - people ) shares were up 67 pence, at 24.36 pounds, in late London trading. The company is widely diversified, with operations in precious and base metals, coal, diamonds and paper. More concentrated miners might see value in taking the conglomerate and splitting it among themselves, capturing the discount that conglomerates often suffer in relation to their more focused peers.
Brazil's Companhia Vale do Rio Doce (nyse: RIO - news - people ), Switzerland-based Xstrata and Britain's Rio Tinto are chewing over a possible offer and have hired financial advisers, The Observer newspaper said on Sunday, citing unidentified sources in London.
The mining sector has been undergoing a period of consolidation as miners vie to secure supplies of commodities such as iron ore, coal and nickel. CVRD, the Rio de Janeiro-based iron-mining powerhouse, is thought to be the likely winner of the complex bidding war to acquire Canadian nickel giant Inco (nyse: N - news - people ). Rumors have also circulated that Rio Tinto could make a rival offer for the Toronto-based company.
In July, shareholders of Falconbridge--also domiciled in Toronto--turned down an Inco bid for their company, which will end up being acquired by Xstrata.
An Xstrata spokesman told Forbes.com that the company would not comment on speculation about Anglo American, while an Anglo American spokesman said there would be no comment whatsoever.
"I would presume that this is a hostile bid," said Uday Patel, a London-based analyst from CRU, a consultancy group focused on the mining, metals, power, cables, fertilizer and chemical sectors. "But I don't see the logic. What do you then do with Anglo American? Do you split it three ways or four ways?"
Patel also predicted there would be some antitrust issues in certain markets. "There could be an element of posturing involved," he said. He was surprised that Rio Tinto was said to be interested. "The company may well have panicked and had its hand forced," he added.
