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What: Shares of rare-earth metals miner Molycorp (NYS: MCP) are up by as much as 15% today after it announced it was purchasing Toronto-based Neo Materials for 1.3 billion Canadian dollars, a 42% premium over its closing price Thursday.
So what: This is an interesting combination of one of the largest rare-earth miners and one of the largest rare-earth processors. Rare-earth metals are necessary for the production of smartphones, wind turbines, electric cars, and myriad other products. This move should help streamline production efforts without any loss of jobs, according to the CEO of Neo Materials.
Now what: There really are just two major rare-earth miners and two rare-earth processors in the world right now, so this combination is interesting, to say the least. I'm eager to see how it will play out over the long term, but, as of now, I see no reason why it won't be a success. I've been critical about Molycorp's valuation before today, but I finally feel the stock may necessitate another look at these levels.
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At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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