Xstrata gains bid support
LARGER-than-life Xstrata boss Mick Davies yesterday said he had investor backing from the mining giant’s largest shareholder in its proposed £26bn merger with Anglo American.
Glencore International is “very supportive” of the nil-premium merger, Davies said.
The chief executive added that the company had no intention of altering the terms of the proposed marriage. Davies dismissed the idea that a premium was being discussed.
He said: “We are not proposing taking over the company and Anglo shareholders will still own shares in the group. Both can benefit equally from a merger.”
Xstrata announced earlier this year that it was seeking a “merger of equals” with its rival Anglo American, headed by embattled Cynthia Carroll. The tie-up would combine assets in Canada, Australia and South Africa and create a group to compete with mining titan BHP Billiton – the world’s largest miner.
Davies, renowned for his aggressive management tactics, has said that the tie-up would add $1bn per year to the combined group’s pretax earnings within three years. Anglo swiftly rejected the bid when it was tabled in June, saying it undervalued the business.
Carroll has since pledged to cut costs by $2bn by 2011 in a bid to reassure investors she is managing the company through the downturn.
The news came as Xstrata unveiled its first-half figures; first-half net income fell 77 per cent to $643m (£379m) after a slump in metals prices, while sales dropped 39 per cent to $9.9bn.