Vale of shadows

11 March 2008 By John Foley Follow @johnsfoley

It’s hard to see how the Brazilian miner can overcome the obstacles to making a compelling offer for its UK rival. But unlike BHP Billiton’s synergyled bid for Rio Tinto, this isn’t a deal anyone really needs.

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Vale, the Brazilian miner, faces an increasingly slim chance of reaching a deal to take over Xstrata, its UK rival, according to the Wall Street Journal. Based on Monday's closing prices, the combined value of the two companies including debt would be almost $250bn.

Vale made an informal cashandshares offer to Xstrata last month, which valued the company at $90bn. Since then, a 15% fall in Vale's share price has wiped $10bn off the potential offer.

The Brazilian group has yet to reach an agreement with Glencore, Xstrata's biggest shareholder. The Swiss trader wants to provide marketing services for Vale's nonferrous commodities, say people familiar with the situation.

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