RE: Hell of a drop todayTeck in the toilet? I think that may be a stretch. Certainly, by the the time CUU issues it's feasability results (late spring 2009) no one knows how gung-ho they'll be to jump onboard...
Here's a recent newsbit:
Teck's share price is within pennies of its 52-week low, down more than 50% from a year ago. Competitors BHP Billiton (NYSE:BHP) and Peabody (NYSE:BTU) are also down, but by significantly less. Fording's share price has been up about 100% in the past year, so if Teck can execute to its plan it should see its share price begin to turn back upward.
A couple of analysts were not impressed. BMO Capital Markets cut Teck's rating to 'underperform' and set a price target of C$30/share, 50% lower than its earlier target. The high cost of operations in Teck's Fort Hills oil sands project is also weighing on the share price.
Taking on nearly $10 billion in new debt and issuing new shares to pay for a huge acquisition is not a recipe for warm feelings from analysts and traders. And while Teck's timing could have been better, this could be a really good deal for the company if it can bring up the rest of its operations to match the expected results from Fording.
Paul Ausick
October 3, 2008