Shares of Glencore, the world’s biggest commodities trader, surged more than 70 per cent in Hong Kong trading and rose 20 per cent in early London trading on speculation that it is open to takeover offers and is close to selling its Canadian agriculture business.
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The highly-geared company revealed in August that it would seek to raise $US2.5 billion ($3.5 billion) in equity and also sell assets in a bid to lighten its debt load, and London newspapers speculated that a stake in Glencore’s agriculture assets was most likely to be sold.
In Hong Kong, the stock surged as much as 72 percent, and settled at HK$12.60, up 17.76%.
The company – along with other mining firms – has been hit hard by the fall in commodity prices, and it is trying to reduce its debts.
Early last week its shares slumped to 71p ($1.53), while the cost of insuring its debt has blown out to near default levels.
Hong Kong shares rose 1.6 per cent on Monday, with technology and financial stocks leading the way, as expectations of a United States interest rate hike this year diminished on weaker-than-forecast jobs data.
The stock has recouped all of its losses from the past week, with several brokers saying a recent sell-off was overdone as the company had the ability to withstand the crunch on commodity prices. It said “the Board confirms that is not aware of any reason for these price and volume movements”. That business may be worth as much as $10 billion, Sanford C. Bernstein and Co. said in a report on Monday. In London, shares were gaining 7 percent to trade at 101.60 pence.
Bernstein maintained an “outperform” rating on the stock with a target of 450 pence.
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Citi suggested last week that Glencore could pull-off a management buyout and take the company private again, but The Telegraph’s sources say CEO Ivan Glasenberg is “dismissive” of this idea.
