Indian mining company Vedanta Resources PLC has acquired a 9.5% stake in HudBay Minerals Inc., but RBC Capital Markets analyst Adam Schatzker thinks that an outright takeover is highly unlikely.

In a note to clients, he put the odds of a takeover of less than 25%. One issue is that Vedanta would likely have to buy Asarco LLC first, and that is a tricky bankruptcy sale. Mr. Schatzker also suspects Vedanta may choose to sell its HudBay shares and a book a profit as high as $70-million. Put together, he thinks the odds of a takeover are lower than the market is discounting.

"We think the safe bet for existing [HudBay] shareholders is to hold their shares or sell into the rally. We do not think this is a good time for investors to build a new position or add to existing ones," he wrote.

If Vedanta does try to acquire HudBay, Mr. Schatzker believes it could offer between $9.00 and $10.00 a share. He rates HudBay a "sector perform" with a price target of $7.50 a share.

I have been seriously thinking of liquidating my holdings in HBM, but still think that this can top 9.00 this year.