Anglo-Swiss mining operator Xstrata has confirmed talks with the world’s largest commodities trader Glencore International plc about an “all share merger of equals.”
After much speculation about alleged talks, Xstrata issued a statement today confirming that it has received an approach from and is in discussions with Glencore, but stressed that “there can be no certainty that any offer will be made.”
Under UK takeover rules, Glencore now has until 5:00pm on 1 March 2012, either to announce a firm intention to make an offer for Xstrata or announce that it does not intend to make an offer.
As rumors grew today, the share prices of both Xstrata and Glencore made significant gains in London, to the extent that the market capitalization of a merger between the two, previously estimated at around $80 billion, could rise as far as $100 billion.
The two companies have historical ties. Glencore already owns 34 percent of Xstrata, which was formed in 2002 when it purchased Glencore's coal assets in Australia and South Africa.
After a series of acquisitions, Xstrata is now a diversified mining company with major interests around the world in copper, coking coal, thermal coal, nickel, ferrochrome, vanadium and zinc. After a long take-over battle with Inco, Xstrata finally acquired Canadian miner Falconbridge in 2006.
Glencore, also based in Switzerland but with its registered office in the Channel Island of Jersey, raised around $10 billion in an IPO in May last year when it floated its shares in London and Hong Kong.
Glencore has production facilities around the world and supplies metals, minerals, crude oil, oil products, coal, natural gas and agricultural products to international customers in the automotive, power generation, steel production and food processing industries.
