Molycorp becomes takeover target as market capitalization sinks below net assets
Molycorp (NYSE:MCP) has seen its share price sink to abysmal lows following numerous problems in 2012, leaving the American rare earth producer a highly appealing takeover target.
Bloomberg reports that Molycorp, which owns the USA's largest deposit of rare earth metal and has long been heralded as the answer to the Chinese stranglehold on supply, posted a disastrous 61% loss for 2012, losing $600 million in the second half.
2012 has been a tough year for Molycorp, with loss-inducing declines in rare earth prices, cost overruns at its Mountain Pass mine in California's Mojave Desert, an investigation launched by the SEC over the accuracy of public disclosures and the ouster of CEO Mark Smith.
Shares closed at $9.44 at the end of the final trading session for 2012, compared to a peak of $77.54 in May 2011, leaving the market value of the company 0.81 times the company's book value, and making a highly alluring acquisition target for several parties, most prominent amongst them Asian automakers.
According to analysts Japan's Nissan and South Korea's Hyundai Motor Co. are two of the leading candidates for a Molycorp buyout to shore up access to rare earth metals for electric motors.
The US, EU and Japan have long searched for a solution to China's semi-monopoly on rare earth production. The Middle Kingdom has recently controlled up to 90% of the global supply of rare earth metals, which are vital materials for the renewable energy, consumer electronic and military industries, and areused in wind turbines, smart phones and cruise missiles.