Sunday June 21, 03:38 PM
Xstrata 'in merger approach to Anglo American'
LONDON (AFP) - Mining group Xstrata (LSE: XTA.L - news) has approached rival Anglo American (LSE: AAL.L - news) about a merger that would create one of the world's biggest mining companies, a report said on Sunday.
Xstrata's chief executive Mick Davis wrote to the board of Anglo American last week with a view to launching discussions about a possible 41 billion pound (49 billion euro, 68 billion dollar) deal, the Sunday Telegraph reported.
It is not known if Anglo American has made a formal response.
Investment banks Goldman Sachs (NYSE: GS - news) and UBS (Virt-X: UBSN.VX - news) are believed to be advising Anglo, whose headquarters are in London, while Xstrata is being advised by Deutsche Bank (Xetra: 514000 - news) and JP Morgan Cazenove.
The activities of the two companies overlap in many areas. Both own coal assets in Australia and South Africa, which suggests a merged group could make big cost savings.
There could also be potential savings across their copper mining operations.
Japanese investment bank Nomura has estimated a potential merger could achieve cost savings of 700 million dollars a year, the Telegraph said.
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