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Is Atlas Iron Limited the next takeover target for Mineral Resources Limited?

Shares in Mineral Resources Limited (ASX: MIN) and Atlas Iron Limited (ASX: AGO) won’t go anywhere today, as both entered a trading halt until the earlier of Monday 9 April or the release of a further announcement regarding recent media speculation.

Last night, the Australian Financial Review revealed that Mineral Resources was looking at Atlas as its next takeover target, after its bid on AWE Limited (ASX: AWE) was rejected in favour of a more appealing offer from Japanese conglomerate Mitsui.

Atlas is an iron ore company with operations in the Northern Pilbara region, and recently suffered from widening discounts on its low grade iron ore. The stock plunged from a 52-week high of 4.3 cents recorded on January 3 to 1.9 cents yesterday. The current market capitalization of Atlas is just $176 million.

Taking over Atlas, Mineral Resources wouldn’t acquire just iron ore projects. Mineral Resources is primarily a provider of mining services, including logistics, and the acquisition would be an opportunity to further expand its port capacity, thanks to Atlas’ facility in Port Hedland.

We’ll keep you informed when the two companies update the market.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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