London, England — MININGREVIEW.COM — 02 October 2009 – Regulators in the United Kingdom have stipulated that Xstrata Plc “’ the world’s fifth biggest diversified mining group by market value “’ must make a formal takeover bid for rival mining giant Anglo American by 20 October or walk away for six months, as Anglo has again rejected a merger.
“Xstrata must, by 5.00 p.m. on 20 October 2009, either announce a firm intention to make an offer for Anglo American, or announce that it does not intend to make an offer for Anglo American,” the UK Takeover Panel said in a statement today.
Anglo’s new chairman John Parker has been consulting with shareholders about Xstrata’s “nil premium” merger plan, which the firm said was “totally unacceptable” on June 22, one day after Xstrata unveiled its plan.
“Nothing since then has changed the Board’s view, and the Board reiterates its emphatic rejection of Xstrata’s approach,” Anglo said in a statement. “Anglo American believes it is in the interests of the group and its shareholders that this period of uncertainty is brought to an end,” it added.
Parker said on July 20 that there was “a clear value gap” in Xstrata’s proposal, and that it was a “distraction” for management.
Xstrata has said it wants to engage with Anglo management to discuss possible merger synergies it has estimated to be worth US$1 billion (R8 billion), which it said would be in addition to an Anglo programme to cut cost by US$2 billion (R16 billion) by 2011.
Xstrata also says that bringing together the fourth and fifth biggest diversified mining firms by market value would create a group better able to compete against rivals BHP Billiton and Rio Tinto.
A combination of the two firms would create the world’s biggest producer of zinc, platinum, coal for power stations and ferrochrome, and the second-biggest in coal for steelmaking and copper.