Molycorp Inc (NYSE:MCP) shares are up almost 10 percent after a report from Bloomberg suggesting that it could become the target of a buyout from manufacturers like Nissan Motor Co., Ltd. (PINK:NSANY) (TYO:7201) or Siemens AG (NYSE:SI) (FRA:SIE) (ETR:SIE). The company holds the largest deposit of rare earths in the U.S. Rare earth is used in a wide variety of products, from cell phones to cars.
Bloomberg research indicates that shares of Molycorp Inc (NYSE:MCP) are trading at a discount of about 19 percent compared to the company’s book value. That, paired with the company’s access to rare-earth resources, could make it attractive enough for a bid according to analysts at Byron Capital Markets Ltd.
Molycorp Inc (NYSE:MCP) acquired Neo Material Technologies Inc., last year in order to expand its refining and processing operations. Analysts at Robert W. Baird & Co. said that acquisition could even mean that the company could interest private-equity firms.
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Molycorp has been struggling this year as prices for rare-earth have declined after buyers found materials to use as a substitute. Also the company’s mine in California has cost more than expected, its CEO left, and it was the subject of a regulatory investigation. The company’s stock hit a record low in November, losing investors 61 percent in losses in its share price during 2012. It first dropped below the company’s book value in August after the company reported losses in its second quarter earnings report.
If Molycorp Inc (NYSE:MCP) does end up being bought out, Goldman Sachs Group, Inc. (NYSE:GS) estimated that it could bring shareholders $15 per share. After today’s increases, the stock is still only trading at a little over $10 per share.