Xstrata sticks by merger plan
MINING group Xstrata remains committed to a nil-premium merger with Anglo American, the company said yesterday after a newspaper claimed the company would offer a £5bn sweetener to seal the deal.
Xstrata is understood to be looking to raise the money via a rights issue because its debt-laden balance sheet had made it difficult to justify further borrowings.
But Xstrata said in a statement that its proposal “remains a nil-premium merger of equals, in which both companies’ shareholders will share equally the substantial benefits that are uniquely available from a merger”.
The statement added: “The proposal bears none of the characteristics of a takeover, in which a premium would typically be payable.”
Anglo’s shareholders are in favour of a merger deal in principle but want better terms than the nil-premium, all-share merger that Xstrata proposed in June.
Xstrata is also believed to be willing to consider taking a smaller stake in the enlarged company.
Xstrata has been mulling its options after Anglo last month rejected proposals for a merger that would have created a mining giant valued at more than £40bn.
Anglo last week appointed veteran industrialist Sir John Parker – the 67-year-old chairman of utilities giant National Grid – as chairman.
He will replace Sir Mark Moody Stewart, who is retiring, and is expected to help bolster the group’s leadership as it seeks to fend off the unwanted Xstrata approach.
Anglo’s decision to opt for an established UK industrialist for the top role comes at a time of weakness – it has underperformed rivals during the recent commodities boom.