Vale Heard Mulling Autlan Bid

Mexican manganese and ferroalloys producer Compania Minera Autlan is heard garnering interest from a handful of bidders, including Brazilian mining giant Vale. Vale – whose recent manganese sales hit a record – is understood to be looking at Autlan as prices for its main product hit historic highs. Autlan, which went onto the block earlier this year, has a market cap of $1.96bn and trades at a price to earnings ratio of 19.4x, according to Economatica. If sold to a strategic buyer, the asset could fetch a premium of 20% or more, taking its potential price tag above $2.35bn, says a Brazil-based mining analyst who asks not to be identified. “I don’t think it would make sense for Vale to acquire Autlan,” says Raphael Biderman, a natural resources analyst at BBI, remarking on the low grade of manganese found in the company’s mines. A handful of other steel and mining concerns are nonetheless understood to be studying the integrated operation. Autlan’s executives are said to be targeting a sale by October. Vale recently raised $12bn in a record equity follow-on whose proceeds are destined for capex and M&A. Autlan stock soared earlier this year amid speculation of a sale but saw a sharp correction in July. It closed yesterday’s session at MXP73.47, some 22% off of the July 21 high. Autlan, part of Grupo Ferro Minero, hired Lehman to advise it on a sale. Autlan did not return repeated calls seeking comment. A Vale spokesman declines to comment on M&A plans.