The owner of the biggest U.S. deposit of metals that go into everything from smartphones to solar panels and hybrid cars handed investors losses of 61 percent in 2012 amid a slump in rare-earth prices, cost overruns at its California mine, a regulatory probe and the departure of its chief executive officer. Even after the shares rebounded from a record low in November, Molycorp is trading at a 19 percent discount to its book value, according to data compiled by Bloomberg.
Molycorp’s low valuation and the chance to lock in rare- earth resources could spur manufacturers from Nissan Motor Co. (7201) to Siemens AG (SIE) to make a bid, according to Byron Capital Markets Ltd. After expanding its refining and processing operations with last year’s purchase of Neo Material Technologies Inc., the $1.3 billion company may even appeal to private-equity firms, Robert W. Baird & Co. said. Goldman Sachs Group Inc. projects that Molycorp could fetch $15 a share in a takeover, a 59 percent premium to its Dec. 31 close.
“At this point, Molycorp is definitely in play,” Luisa Moreno, an analyst at Euro Pacific Capital Inc. in Toronto, said in a telephone interview. “It would be a very good target for companies that are interested in being in this space if they recognize the rare-earth space is important and they have the cash to take Molycorp and make it a real producing company.”Twitter