Xstrata confirms takeover talks

2007-12-13 00:00

Mining group Xstrata confirmed yesterday it has held talks about a possible takeover following a wave of rumours, but it said no proposals resulted from the discussions.

“None of these very preliminary discussions have resulted in any proposal being made either for or by Xstrata and there can be no certainty that any such proposal will result,” the company said.

It did not provide details about the talks, but a disclosure table from the UK Takeover Panel listed Xstrata as an potential “offeree”, or takeover target.

An analyst said Xstrata might be soliciting takeover bids under pressure from its biggest shareholder, privately-held commodities trader Glencore, which has a 34,6% stake.

“I think this whole thing seems to be driven around the requirements of Glencore, not necessarily what [chief executive] Mick Davis wants to do,” said the analyst, who declined to be named.

A cash-and-share offer would provide a cash injection for Glencore, which needs funds to pay off partners who want to leave the firm, he added.

Xstrata said it put out a statement in response to media speculation about a possible merger, which has intensified in recent days and sent its shares surging.

“Xstrata confirms that its ongoing interaction with other industry participants includes dialogue with a number of parties covering a range of topics of mutual interest such as industry consolidation,” the statement said.

Xstrata shares have shot up about 30% since November 22, riding a renewed wave of takeover speculation since the world’s biggest mining group BHP Billiton shook the sector by unveiling a plan on November 8 to acquire number three Rio Tinto.

Some analysts and fund managers are sceptical about a deal being consummated, at least in the near term following the ramp-up of Xstrata shares, making suitors wary of overpaying.

— Reuters.

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