Anglo turns Xstrata down flat

23rd Jun 2009 07:37

Directors of mining giant Anglo-American appear on a collision course with some of its leading investors after they flatly rejected Xstrata's merger approach last night.In a statement, Anglo described the terms of Swiss-based rival Xstrata's merger approach as "totally unacceptable," adding that the proposals lacked "strategic merit". Xstrata had earlier claimed the logic of merging the two firms was "highly compelling".Anglo, though, rejected these claims and said it has already set in train a plan to make "substantial savings" adding the merger would have an adverse impact on its operations. "The board has concluded that a combination with Xstrata would profoundly impact the nature of the group's portfolio by significantly diluting Anglo American's unique exposure to the structurally attractive platinum, iron ore and diamond markets."Xstrata, though, is expected to continue its pursuit and will attempt to woo Anglo's investors by revealing the details of its proposal, which will include a plan to save about $1bn a year by combining the duo's coal and copper operations.The Swiss-based group may also be tempted to include a cash element in any proposal to win over some Anglo investors still smarting from chief executive Cynthia Carroll's decision to axe the final dividend earlier this year.