Anglo shares soar after Xstrata seeks talks
Monday 22 June 2009
Shares in Anglo American jumped as much as 12 per cent today after rival Xstrata sought talks about a merger of equals to better compete in a consolidating mining sector.
Anglo shares were up 9.0 per cent in London at 1,769 pence at 8:20 a.m. British time following Xstrata's approach to Anglo announced on Sunday. Before today, Anglo shares in London had underperformed the UK mining index by around 20 percent.
Shares in Xstrata fell 1.2 per cent to 673 pence, compared with a 1.5 per cent rise in the UK mining index.
"Anglo may well now be 'in play' and the board is likely to have to examine all potential routes to maximise shareholder value," analyst Michael Rawlinson at Liberum Capital said in a note.
Bringing the two firms together would create a group worth $68 billion based on Friday's closing share prices versus BHP Billiton at $144 billion and Rio Tinto at £45 billion.
Xstrata, the world's largest exporter of coal for power stations, yesterday said it wanted to start talks with Anglo about a merger of equals.
"The combination would create a premier portfolio of operations diversified across multiple commodities and geographies, with enhanced scale and financial flexibility to fund future growth," Sunday's statement said.
Anglo, which owns the world's largest platinum producer, South Africa's Anglo Platinum, said in a statement the situation was at a very preliminary stage and declined to give further details.
Anglo is likely to resist the attempt by Xstrata to forge a larger mining group better able to compete with bigger competitors BHP, Vale and Rio, a source close to the situation said yesterday.
Even if Anglo was not keen about a merger with Xstrata, it would have to seriously examine all M&A possibilities, Liberum's Rawlinson said.
"A whole range of potential suitors may yet come out of the woodwork such as Vale or even a Chinese backed BEE consortium."
BEE is South Africa's Black Economic Empowerment, which seeks to include blacks in the mainstream economy after being excluded during apartheid and has resulted in black investors taking stakes in mining groups.
Xstrata has grown from a small Swiss producer of steel alloys in the late 1990s to the fifth-biggest mining group by market value through a string of acquisitions.
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Ball pool for adults opens in London
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 Rashida Jones speaks out against male-centric porn saying 'women should have sex and feel good about it'
Boris Johnson claims porn-obsessed Islamic jihadists are 'literally w*****s'
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Putin opponent reveals Russian President's daughter's secret identity
Ball pool for adults opens in London
Gay couple buy JebBushForPresident.com web domain, and refuse to sell
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...