Return of the megadeal as miners forge £50bn merger

The London-listed mining behemoths Xstrata and Glencore are to stage a £50bn merger in a move that raised hopes the market for big corporate megadeals could at last be recovering.

Following Facebook's $100bn flotation plans, and barely a week after the pharmaceuticals giant Roche bid $5.7bn for America's Illumina, yesterday's mining tie-up added to the cautious air of optimism among City dealmakers. Mark Pacitti, a corporate finance partner at Deloitte, said: "With Roche, then Facebook, and now Xstrata and Glencore, we have three big deals in a matter of days. This is a good indicator that we could see increased deal activity in 2012.

"The private equity guys have got a lot of capital to spend and corporate balance sheets are strong," he added.

Glencore, the commodities trader, and the mining giant Xstrata are considering an "all-share merger of equals which may or may not lead to an offer being made". Xstrata head Mick Davies would become chief executive of the combined group, with Ivan Glasenberg, Glencore's billionaire head, taking up the deputy's position.

The deal would add massively to Glencore's control of mining assets across the world, expanding the empires of its secretive commodities trading heads like Tor Peterson and Daniel Mate.

Under the UK's "put up or shut up" rules Glencore has until 1 March to make a formal offer or walk away.

Mr Glasenberg has been pushing for a deal with Xstrata for years. Last May Swiss-headquartered Glencore became the first company in 25 years to be fast-tracked into the FTSE 100 index in London's biggest ever flotation. It already has a 34 per cent stake in Xstrata. Xstrata is also listed in London and headquartered just two miles away from Glencore in Baar.

Glencore is the world's largest commodities trader, controlling 32 per cent of the internationally traded market for thermal coal, used to fire power stations, and with a large presence in products including oil, gold and foodstuffs. However, the combined group would be overwhelmingly a mining company, with commodities trading accounting for only 19 per cent of its 2011 profits, according to an analysis by Credit Suisse. It would be the world's largest producer of zinc and the third biggest producer of copper.

Glencore was instrumental in creating Xstrata, selling coal assets to it in 2001 which considerably boosted the operations of the fledgling Swiss miner.

A deal between the two would create the world's fifth largest mining firm behind BHP Billiton, Brazil's Vale, Riot Tinto and China's Shenhua Energy.

Life and Style
A nearly completed RoboThespian robot inside the Engineered Arts workshop is tested in Penryn, England. The Cornish company, operating from an industrial unit near Falmouth, is the world's only maker of commercially available life sized humanoid robots
techSuper-intelligent robots could decide destroying the human race is the kindest thing to do
News
The current recommendation from Britain's Chief Medical Officer, is that people refrain from drinking on at least two days a week
food + drinkTheory is that hangovers are caused by methanol poisoning
Life and Style
techConcept would see planes coated in layer of micro-sensors and able to sense wear and tear
News
Patrick Stewart in the classiest ice bucket to date
people
PROMOTED VIDEO
News
newsComedian Lee Hurst started trend with first tweet using the hashtag
News
scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
News
newsRyan Crighton goes in search of the capo dei capi
Life and Style
Customers can get their caffeine fix on the move
food + drink
Extras
indybest

Arts and Entertainment
Actors front row from left, Jared Leto, Jennifer Lawrence, Meryl Streep, Ellen DeGeneres, Bradley Cooper, Peter Nyongío Jr., and, second row, from left, Channing Tatum, Julia Roberts, Kevin Spacey, Brad Pitt, Lupita Nyongío and Angelina Jolie as they pose for a
film
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Sport
sport
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Software Developer (Java /C# Programmer)- London

£30000 - £45000 per annum: Harrington Starr: A global investment management fi...

Senior Network Engineer-(CCIE, CCNP, Cisco, London)

£65000 - £75000 per annum: Harrington Starr: Senior Network Engineer-(CCIE, CC...

Senior Network Analyst - (CCIE, Cisco, CISSP)

£70000 - £80000 per annum: Harrington Starr: Senior Network Analyst - (CCIE, C...

Senior Network Engineer-(Design, Implementation, CCIE)

£60000 - £80000 per annum: Harrington Starr: Senior Network Engineer-(Design, ...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition