London-headquartered Anglo American Plc, which manages the world's largest platinum producer, publicly confirmed on Sunday that it has received an initial merger proposal from Swiss-based miner Xstrata Plc that is expected to create a giant company in the commodity sector.
"The Board of Anglo American confirms that it has received a preliminary proposal from Xstrata which may or may not lead to a transaction involving the group," Miningmx quoted the company as saying today.
Both mining firms have said that they could not guarantee completion of a deal, which is estimated to be worth $68 billion (41 billion pounds) based on their stock market value on Friday.
The combined company would be a new top-tier mining giant with massive wealth of copper, nickel, coal, platinum and other metals and minerals. Both companies have coal mines in Australia and South Africa and copper operations in South America. The combined entity would be a global leader in the production of coal, ferrochrome, base metals and platinum.
"Xstrata believes a merger of these two world-class companies with complementary assets is highly compelling," Xstrata, the largest exporter of coal used by power plants, said in a brief statement on Sunday.
"Xstrata has already quantified substantial operational synergies from the combination that are not available to either company operating alone. In addition, Xstrata believes the optimization and reprioritization of the combined company's organic growth pipelines would significantly enhance shareholder returns," Xstrata added.
Glencore International AG, which has a 35 percent stake in Xstrata, has approved the merger transaction, according to the reports.
Xstrata Chief Executive Officer Mick Davis took the step after Rio Tinto Group accepted $5.8 billion in capital for launching an Australian iron ore joint venture with BHP Billiton, the world's biggest miner.
The company said in the statement, "Xstrata is seeking to engage with the Board of Anglo American regarding a merger of equals that would realize significant value for both companies' shareholders."
The companies have not disclosed the terms of merger proposal. Some analysts said that the proposal could be the step forward toward the possibility that South Africa could lose its iconic blue chip miner, Anglo American.
Source: AllHeadlineNews
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