Shares of Walter Energy WLT.N rose for a second day on Friday on reports that the U.S. coal mining company is the target of a takeover.
The newspaper, The Australian, reported that BHP Billiton (BHP.AX) (BLT.L), the world's largest mining company, is considering a $6 billion bid for the company. It cited no sources.
On Thursday, a British newspaper, The Independent, said BHP and Anglo American (AAL.L) were interested in acquiring Walter, which has large reserves of steel-making metallurgical coal. That report said Anglo had poured cold water on such talk when it first came up in September.
BHP declined to comment. The company has flagged that it would chase acquisitions in commodities where it is not one of the leading players, after it was forced to scrap three big takeovers between 2008 and 2010 on competition and political concerns.
As one of the world's biggest coal producers, it would be likely to run into competition hurdles if it bid for Walter Energy.
UBS analyst Glyn Lawcock played down the likelihood that BHP would be interested in Walter Energy as BHP has the ability to double coking coal production from its Australian operations and is also focusing on Indonesia.
"U.S. coal producers are generally higher cost and lower margin than Australian assets within BHP current portfolio. I'm not sure why BHP would want to do it," he said.
A spokesman for Alabama-based Walter said the company would not comment on speculation
The company's shares rose 12 percent on Thursday and jumped 6 percent on Friday morning before easing to close up 2.8 percent at $77.36.
Analyst Lucas Pipes, of Brean Murray Carret & Co, said the price rise was clearly linked to the market talk that Walter was a target.
He said U.S. coal producer Peabody Energy (BTU.N) and European steelmaker ArcelorMittal ISPA.AS (MT.N) had just received final approval to go ahead with their joint acquisition of Australian miner Macarthur Coal MCC.AX.
"That indicates there's still a lot of demand for met coal reserves and Walter falls into that category," Pipes said.
Other U.S. coal stocks rose on Friday on macro-economic issues, analysts said. Alpha Natural Resources ANR.N ended up 4.8 percent to $21.65, Arch Coal ACI.N finished 4.4 percent higher at $17.50 and Peabody Energy (BTU.N) rose 3.2 percent to $39.46. The Dow Jones coal index .DJUSCL closed 4.4 percent higher.
(Reporting by Steve James in New York and Sonali Paul in Melbourne; editing by Dave Zimmerman, Bernard Orr and Tim Dobbyn)