Not so foreign

22 June 2009 By Una Galani Follow @ugalani

Miner Xstrata has put a friendly face on its proposed $70bn mergerofequals with South African rival Anglo American. But Xstrata is really seeking to capitalise on Anglo s weakness. With Anglo wary of a tieup and a hostile deal tough, Xstrata may have to prepare for a bear hug.

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Anglo American, the South African mining group, said on June 21 it had received a preliminary proposal from Xstrata for a potential merger of equals. The two miners have a combined market capitalisation of roughly $70bn.

The combination would create a premier portfolio of operations diversified across multiple commodities and geographies. Xstrata has already quantified substantial operational synergies from the combination that are not available to either company operating alone, Xstrata said in a separate statement.

Anglo gave no further details, but said a further announcement will be made if and when appropriate.

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