Anglo American says no to Xstrata
Tuesday 23 June 2009
Anglo American comprehensively rejected rival miner Xstrata's nil-premium merger proposal yesterday, claiming it was "unattractive" for shareholders and had been pitched on "totally unacceptable" terms.
After barely 24 hours to consider the offer – and despite a 4.6 per cent share price lift after Sunday's acknowledgement of the approach from the Xstrata chief executive – Anglo unequivocally snubbed the merger plan.
"The Board has concluded that the strategic case for the combination is unattractive for Anglo American shareholders. Irrespective of this lack of strategic merit, the terms proposed by Xstrata were totally unacceptable," the company said in a statement. "In the light of the review the Board of Anglo American has unanimously concluded that the proposed combination with Xstrata would not be in the interest of Anglo American shareholders."
The company said the tie-up would weaken its strategic position by diluting its strong role in high-performing platinum, iron ore and diamond markets with exposure to nickel and zinc.
Xstrata was miffed at the speed of the refusal. "We are disappointed by Anglo American's rapid rejection," a spokesman for the company said. "We are also surprised that the Anglo American board has not seen fit to engage with Xstrata to discuss our proposal in view of the substantial value for both companies' shareholders that would arise uniquely from a merger of the two companies."
Although analysts estimated synergies of $700m (£428m) to $1.7bn a year, particularly from streamlined head office functions, Anglo rejected the claim that there are significant potential savings. It places greater store by its own $2bn (£1.2bn) cost cutting programme, half of which is to come from procurement and half from efficiency savings by 2011.
The rejection came after a day of speculation that Xstrata would be forced to change its terms. Anglo was always known to be wary, an despite some shareholder criticisms of Cynthia Carroll, the Anglo chief executive, Xstrata is widely thought to need the deal more. The group struggled after the collapse of last year's $90bn approach from Vale, the Brazilian iron ore giant, and it held a $5.9m rights issue in March to pay down debts boosted by last October's decision to more than double its stake in Lonmin.
As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”
- 1 Mother fed her daughter tapeworms to make her skinny for beauty pageant
- 2 Crystal Palace next manager latest: Palace consider Ally McCoist - EXCLUSIVE
- 3 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 4 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 5 Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'
'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
West poised to join forces with Assad in face of Islamic State
Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – as hunt begins for killer
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
Negotiable: Harrington Starr: Market Administrator (1st line Support, Trade Fl...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
Negotiable: Harrington Starr: Data Support Analyst (Linux, Solaris, Windows Se...
Negotiable: Harrington Starr: Helpdesk Support Engineer (Windows, MS Office, E...