Mick Davis, who built Xstrata Plc into one of the world’s biggest mining companies, is trying to do it again.
Davis, a 56-year-old South African, is considering a bid for the nickel business of Vale SA (VALE), the world’s top producer, according to people with knowledge of the situation. Davis’s investment vehicle X2 Resources values Vale’s nickel business at $5 billion to $7 billion, said two of the people, who asked not to be identified because the negotiations are private.
Through a decade of 40 mergers and expansions, the onetime cricket umpire Davis increased Xstrata’s market value more than 80 times to $50 billion, and became the world’s biggest exporter of power-station coal. After it agreed to be acquired in 2012 by its largest shareholder Glencore International Plc in a $30 billion deal, Davis was to lead the combined company. The power-sharing agreement collapsed when Glencore Chief Executive Officer Ivan Glasenberg demanded the title.
Davis’s X2 has since raised about $4.8 billion from equity investors and has been hunting for assets to buy from the world’s largest miners such as Vale, BHP Billiton Ltd. and Anglo American Plc.
“Mick Davis is a strong and a driven individual who has been very successful,” said Vince Gauci, who was managing director of M.I.M. Holdings Ltd. when Xstrata acquired the Australian metals and coal producer for $3 billion in 2003. “I’ve no doubt that he’s still got the fire in his belly to start again.”
X2 declined to comment on the potential bid. Rio-based Vale said it hasn’t received any proposal or held talks with X2 about its nickel assets. Vale has already said it may try to raise cash by selling some of its assets.
Billiton Role
A successful deal for the Vale assets could mean a return not only for Davis but also for more private-equity investments in mining, according to Ken Hoffman, an analyst at Bloomberg Intelligence. While buyout funds are flush with capital, they’ve struggled to land deals as commodity prices declined.
“I think he really wants to prove to the world that Xstrata wasn’t a fluke, that he can do this all over again,” Hoffman said. “If he comes out and does a great deal, I think it’s good for all the rest of these guys.”
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