M&A Activity Heating Up

A Mineweb article discusses speculation heating up along with takeovers. Mentioned therein is a new trend in M&A that's in the process of changing the majors: huge deposits of copper-gold attracting takeover interest.

The increasing importance of copper deposits containing other metals such as gold is likely to continue developing as a theme, as underlined by 2009 annual results from Barrick, Newmont, and certain other gold stocks. This has put stocks such as Canada-listed Novagold back in the spotlight, not least for the recently increased reserves at Donlin Creek (Alaska, Barrick, 50%) to 33.6m ounces of gold on a 100% basis.

As takeovers (and takeover battles) heat up, rumours are going to fly more easily and widely. A caution: the typical "inside tip" about an impending takeover is little more than an expression of the tale-spinner's hopes. Typically, they don't pan out. It's worthwhile to assume that any tip worth betting on is one acquired illegally, which really shouldn't be acted upon because of potential legal trouble.

For those who'd like to play anyways, takeovers are done for a reason. The typical standard, overall, is assets at a discount. This means that the unexciting process of fundamental analysis, combined with thinking like someone whose career will be at risk if a potential target proves not to be a bargain, is the way to spot any takeover target. Even then, it's something of a crapshoot - but a stock doesn't need a potential takeover bid to go up.