Wednesday June 24, 04:11 PM
Xstrata pushes for merger with Anglo American
GENEVA (AFP) - Swiss mining group Xstrata (LSE: XTA.L - news) said Wednesday it would still try to convince rival Anglo American (LSE: AAL.L - news) of the advantages of a merger between the two, citing potential annual benefits of more 1.0 billion dollars.
"It is well recognised that the combination of Xstrata and Anglo American is a natural fit and the most compelling major transaction available in our industry," Xstrata chief executive Mick Davis said in a statement.
London-based Anglo American, a British-South African enterprise, on Monday rejected the merger proposal, dismissing it as "totally unacceptable."
But Davis maintained Wednesday that Xstrata remains "convinced of the undeniable logic for a merger of equals."
The statement estimated that there would be "pre-tax synergies" of more than 1.0 billion dollars (713 million euros) a year by the third year following completion of the merger.
In the first two years, it added, one-time costs connected with the merger of not more than 500 million dollars would be incurred.
"We will continue to seek to engage with Anglo American's board and management to investigate the value that would accrue to their shareholders and ours from a combination."
A merger would create a company worth more than another mining giant, Rio Tinto (LSE: RIO.L - news) , which earlier this month cancelled a controversial tie-up with China's Chinalco in favour of a joint venture with the world's biggest miner BHP Billiton (LSE: BLT.L - news) .
Anglo American has a market worth of 35 billion dollars (25 billion euros) and Xstrata 33 billion dollars.
Xstrata has said the combined entity would have sales of 54.3 billion dollars and operating earnings of 17.4 billion dollars even before the synergies are taken into account.
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