Commodities trader Glencore and mining giant Xstrata are in discussions on an $82bn (£50m) merger to create a company that would dominate the global mining industry.
Xstrata, already one of the world's largest mining companies, confirmed on Thursday morning that Glencore, the world's biggest commodity trading company, had formally approached it with plans for a "merger of equals".
The announcement sent shares in Xstrata rocketing 12% in early trading to £12.56. Glencore shares were up almost 4% at 448.6p.
"Xstrata confirms that it has received an approach from and is in discussions with Glencore International regarding an all-share merger of equals which may or may not lead to an offer being made by Glencore for Xstrata.
There can be no certainty that any offer will be made," the company said in the statement that follows a flurry on speculation.
UK "put up or shut up" takeover rules mean Glencore has until 1 March to make a formal offer.
The chief executive of Glencore, Ivan Glasenberg, has been pushing for the deal for years, and Glencore has already built up a 34% stake in Xstrata.
Glasenberg, a former coal trader who led the company to a $10bn flotation in London in May, said in August that he was "aggressively" seeking mergers and acquisitions as the market value of rivals slide.
The companies are based two miles away from each other in Switzerland, with Xstrata's headquarters in Zug and Glencore in nearby Baar. Both are listed in London.
Cameron Peacock, an analyst at IG Markets, told Bloomberg: "Combining gives them that much more scale to compete against some of the bigger players," including BHP Billiton and Rio Tinto.
"Glencore being such a dominant trader and marketer of commodities, and Xstrata being such a strong operator of difficult assets, I think it creates enormous value," Prasad Patkar, who helps manage about $1bn at Platypus Asset Management in Sydney, told Bloomberg before the statement.
"On one end you have great mining expertise, on the other you've got great marketing expertise. Two and two together should make five."
Glasenberg has an estimated net worth of $7.2bn, according to the latest Forbes rich list. He earned the moniker "The 10 billion dollar man" when his stake in the company was valued at £5.76bn at last May's flotation.
Four other partners – Daniel Maté, Telis Mistakidis, Tor Peterson and Alex Beard – were also made paper billionaires.
guardian.co.uk
Xstrata, already one of the world's largest mining companies, confirmed on Thursday morning that Glencore, the world's biggest commodity trading company, had formally approached it with plans for a "merger of equals".
The announcement sent shares in Xstrata rocketing 12% in early trading to £12.56. Glencore shares were up almost 4% at 448.6p.
"Xstrata confirms that it has received an approach from and is in discussions with Glencore International regarding an all-share merger of equals which may or may not lead to an offer being made by Glencore for Xstrata.
There can be no certainty that any offer will be made," the company said in the statement that follows a flurry on speculation.
UK "put up or shut up" takeover rules mean Glencore has until 1 March to make a formal offer.
The chief executive of Glencore, Ivan Glasenberg, has been pushing for the deal for years, and Glencore has already built up a 34% stake in Xstrata.
Glasenberg, a former coal trader who led the company to a $10bn flotation in London in May, said in August that he was "aggressively" seeking mergers and acquisitions as the market value of rivals slide.
The companies are based two miles away from each other in Switzerland, with Xstrata's headquarters in Zug and Glencore in nearby Baar. Both are listed in London.
Cameron Peacock, an analyst at IG Markets, told Bloomberg: "Combining gives them that much more scale to compete against some of the bigger players," including BHP Billiton and Rio Tinto.
"Glencore being such a dominant trader and marketer of commodities, and Xstrata being such a strong operator of difficult assets, I think it creates enormous value," Prasad Patkar, who helps manage about $1bn at Platypus Asset Management in Sydney, told Bloomberg before the statement.
"On one end you have great mining expertise, on the other you've got great marketing expertise. Two and two together should make five."
Glasenberg has an estimated net worth of $7.2bn, according to the latest Forbes rich list. He earned the moniker "The 10 billion dollar man" when his stake in the company was valued at £5.76bn at last May's flotation.
Four other partners – Daniel Maté, Telis Mistakidis, Tor Peterson and Alex Beard – were also made paper billionaires.
guardian.co.uk
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