Xstrata’s Anglo bid in doubt
MINER Xstrata looks set to pull out of its hostile bid for Anglo American, after its rival issued a three-week “put up or shut up” clause on the deal.
The usually bullish Xstrata boss Mick Davis is likely to walk away from the proposed merger, which would have created a mining giant worth £56m to rival industry heavyweights Rio Tinto and BHP Billiton.
By walking away from the “merger of equals,” which Anglo has said massively undervalued the company, Xstrata will be banned from making another bid for a further six months.
To win over Anglo shareholders, who have thus far been unimpressed by Xstrata’s bid, Davis’ board would have to up the ante and produce a premium to woo the investors. But turning the bid hostile is not financially viable for the miner.
Analsyts have said that Xstrata will be in a stronger financial position in six months, while Anglo will be weaker.
New Anglo chairman Sir John Parker has given his backing to chief executive Cynthia Carroll, who has said she wants to shake up the company to bring in more shareholder value, rather than letting Davis get his hands on its assets.
Xstrata has until 20 October to make its move.