Can you dig it? Xstrata Glencore merger talks

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Can you dig it? Xstrata Glencore merger talks

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Mining group Xstrata and commodities trader Glencore have confirmed they are in merger talks.

The all-share deal between the two Swiss-based companies would be the industry’s biggest ever.

Glencore, which is the world’s largest diversified commodities trader, already owns just over a third of Xstrata and a tie-up has long been expected — indeed there have been years of informal talks. It is being presented as a merger of equals.

According to Reuters figures Rio Tinto is currently the world’s biggest miner with its shares worth a total of 68 billion euros, followed by BHP Billiton and then Anglo American.

Xstrata and Glencore together would be worth the equivalent of around 60 billion euros after excluding Glencore’s current stake in Xstrata.

However, one potential sticking point would be the price as Xstrata shareholders have indicated they would require some sort of sweetener to approve the move.

Hard bargaining can be expected between the two companies highly competitive bosses — Ivan Glasenberg and Mick Davis.

Questions are also being asked about how they might work together. Both are hard-driven, keen sportsmen who climbed the corporate ladder in the South African coal industry. They have had a close and sometimes tense relationship for more than a decade.