Xstrata merger approach confirmed by Anglo American

Mining giant Xstrata has launched a £43billion assault on rival Anglo American - the Oppenheimer family's flagship miner.

Anglo, which controls the world's biggest platinum producer, confirmed it had received an approach but warned 'the situation is at a very preliminary stage'.

Xstrata's chief executive Mick Davis said yesterday that he had written to Anglo to kick start talks over a possible £43billion all-share merger.

More mergers? Shares across the sector are expected to soar today amid speculation of further consolidation in the industry

'Xstrata believes a merger of these two world-class companies with complementary assets is highly compelling,' he said.　

'We are seeking to engage with the board of Anglo regarding a merger of equals that would realise significant value for both companies' shareholders.'
　
Shares across the sector are expected to soar today amid speculation of further consolidation in the mining industry. Xstrata, which is listed in both the UK and Switzerland, is the biggest exporter of coal used by power plants. Analysts suggest a merger between the two firms could bring about £423million in savings.

The pair have complementary coal assets in Australia and South Africa and there are also potential savings across their copper mining units. Davis said: 'The combination would create a premier portfolio of operations diversified across multiple commodities and geographies.' Xstrata, which has a market value illion) is not thought to have replied yet.
Glencore, the secretive metals trader, which owns a 35per cent stake in Xstrata, is said to be aware of the situation.

Last weekend the Daily Mail disclosed Glencore has been mulling a reverse takeover of Xstrata. But any plans were not imminent. Xstrata has long considered Anglo as an attractive partner but given the South Africa government is a major Anglo shareholder a hostile move would be complicated.

The approach will pile on the pressure for Anglo's already embattled chief executive Cynthia Carroll. Her shares have underperformed Xstrata's by 44per cent recently and the mining sector by 23per cent. Anglo-American is one of the world's oldest miners, founded in 1917 by South Africa's wealthy Oppenheimer family who still retain a stake.