Anglo American rejects Xstrata’s $68-billion deal
23 Jun 2009
Anglo American yesterday responded to Xstrata's merger proposal (See: Xstrata proposes $68 billion merger deal with Anglo American) by saying that the merger deal terms were ''unattractive'' and the proposal on the whole was, ''totally unacceptable.''
Anglo American said, ''The company board has regularly reviewed its strategic alternatives, including the rationale for a combination with Xstrata, and the board concluded that a combination with Xstrata would profoundly impact the nature of the company's portfolio by significantly diluting its lucrative platinum, iron ore and diamond markets while increasing exposure to nickel and zinc.''
London-based Anglo American, a global leader in mining with diverse mining assets said that the main decisive factor was regard to the comparative quality and life of the producing assets and the growth to be delivered from the respective project portfolios of the two companies.
Xstrata, one of the world's largest diversified mining groups and a leading producer of coking coal, nickel and zinc said that it was disappointed that the Anglo board chose to reject the merger even without attempting to discuss the proposal.
The Anglo board also believed that since the company had recently undertaken $2 billion in cost cutting measures, the merger would not deliver substantial further cost savings for the benefit of Anglo American shareholders.
The statement from Anglo, which concluded saying, ''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,'' has practically shut the door on Xstrata for any further bid on the London-based miner with significant exposure in South Africa.
