London, England — MININGREVIEW.COM — 19 August 2009 – Two major Anglo American shareholders have backed new chairman John Parker’s bid to buy time and stave off rival Xstrata’s nil-premium merger proposal, which one of them described as “effectively dead.”
The two investors told Reuters that Parker had met Anglo’s large UK shareholders over the past fortnight, seeking time for chief executive Cynthia Carroll to deliver on planned cost savings.
One large Anglo shareholder “’ a fund manager who spoke on the condition of anonymity “’ said after meeting with both sides that he doubted a deal would emerge. “There’s not a chance of the deal going ahead in the next twelve months, in my view. It is effectively dead,” he speculated.
The fund manager “’ a top ten shareholder in Xstrata “’ added: “Because Parker has got enough credibility to support Cynthia, at least in the near term, it’s all over.”
Another investor “’ a top ten holder of Anglo and Xstrata “’ said some cross-investors favoured the tie-up, but not enough Anglo shareholders had backed it. “It’s pretty clear to us the deal is not going to happen,” he added.
Reuters reports that the investors were divided on whether Anglo might seek a “put up or shut up” ruling from the UK Takeover Panel, forcing its suitor to bid or walk away for six months. Speculation in July had it that such a ruling was near.
Anglo has said that Xstrata’s nil-premium proposal does not make sense, partly due to what it regards as its own superior mining assets with longer lives. Many shareholders have said Xstrata must offer a premium.
Xstrata chief executive Mick Davis told Reuters earlier this month that the group was “quite patient” and could wait to engage with Anglo. He did not believe the deal merited a premium. Anglo declined to comment.