Xstrata waiting in wings for top metals deal

Bloomberg reported that Xstrata Plc which withdrew its USD 47.5 billion bid for Anglo American Plc may reprise its attempt to make the world’s biggest metals acquisition. Mr Davis CEO of Xstrata said that the case for the Swiss company’s proposed merger of equals is undiminished. The company dropped the offer three months after London based Anglo rejected the approach and 5 days before the October 20th 2009 deadline set by UK regulators for Xstrata to make a formal bid or walk away for 6 months. Mr David said that “The pressure is now on them to perform. I’m very happy about that and in 6 months’ time I’ll still be waiting in the wings. We have space now. The focus is on them. They have to deliver.” Mr Nick Hatch an analyst at ING Groep NV in London said that the break may allow Mr Davis to boost output while benefiting from improved commodity prices. Ms Cynthia Carroll, who took over as Anglo CEO in 2007, said that her investors will get greater benefit from Anglo’s plan to cut USD 2 billion of costs by 2011 and develop iron ore, nickel and copper mines in Latin America. Combining with Anglo would be the largest deal yet for Mr Davis, who spent more than USD 33 billion in 6 years adding copper output in Chile, nickel in Canada, coal in Australia and platinum in South Africa. Xstrata said that a merger would save the combined companies more than USD 1 billion annually by its third year. The deal would create a mining group that would rival BHP Billiton Limited. Mr Charles Kernot an analyst at Evolution Securities Limited said that “It’s a matter of just watching what happens in 6 months and 1 day, depending on how the 2 companies perform comparatively over that time.” (Sourced from Bloomberg)