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Xstrata eyes US$67.1b merger with rival

MINING group Xstrata Plc has approached its rival Anglo American Plc to propose a 41 billion pound (US$67.1 billion) merger, the Sunday Telegraph reported.

The newspaper said Xstrata's Chief Executive Mick Davis was understood to have written to the board of Anglo last week to propose opening discussions about a deal.

It was not clear whether Anglo had made a formal response, it said.

The report said Xstrata had not yet outlined the terms of any deal, but said that commodities group Glencore International AG, its 35 percent shareholder, was understood to have been made aware of the approach to Anglo and was thought to be supportive of a deal.

There was no immediate comment from either Xstrata or Anglo.

The Sunday Times newspaper, which also reported the story, said Xstrata's Davis had made the move after pressure from Black Rock and Capital Group, two other big shareholders.

The report also said that Anglo was being advised by Goldman Sachs and UBS while Deutsche Bank and JP Morgan Cazenove were advising Xstrata.

Reuters reported last week that Xstrata was still keen for a marriage with Anglo but that it should be braced for a cold shoulder in spite of vocal match-making by some investors.

Xstrata has regarded Anglo as an attractive partner for several years and talk about such a combination has resurfaced in the wake of a recent iron ore deal between bigger rivals BHP Billiton and Rio Tinto.

But the options are limited for Xstrata since a hostile takeover, while not impossible, would run the risk of opposition from the South African government, a major Anglo shareholder.


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