Dahlman Rose Has Buy Rating On Cleveland Cliffs (CLF)

Dahlman Rose & Co. has a Buy rating on Cliffs Natural Resources Inc CLF and a $80 price target, after the company announced an acquisition yesterday to buy Consolidated Thompson Iron Mines. In the note to clients, Dahlman writes, "Cliffs Natural Resources announced an all-cash offer of C$17.25 per share for Consolidated Thompson Iron Mines, which represented a 29% premium from where the shares closed. We like the enhanced project pipeline the acquisition will give Cliffs and believe that $75 million in synergies is an achievable goal." Dahlman goes on to say, "While management has indicated that this deal would be modestly accretive, we believe that it could add as much as $1.50 to EPS in 2012 and substantially more earnings power when the Bloom Lake project is ramped up to 16 million tons of annual iron ore production. Further, we believe that management should be able to achieve the $75 million in synergies that it indicated are likely, and it is possible that this level of synergies may prove to be conservative. We are reviewing all of our numbers in light of this development." Shares of CLF are up $2.66 in pre-market trading to $87.62.