Xstrata and Glencore discuss merger of equals

Speculation that a merger of Swiss commodities giants Glencore and Xstrata could be on the cards has proved on the money, with Xstrata confirming that it is in talks about a merger of equals with its largest shareholder.

A merger of mining outfit Xstrata and commodities trader Glencore could create a leviathan valued at around £52bn which, in market capitalisation terms at least, would make it the second-largest mining firm listed on the London Stock Exchange, behind Rio Tinto (£57.1bn) but ahead of BHP Billiton (£45.9bn) and Anglo American (£36.2bn).

Glencore, which has a 34% stake in Xstrata, would not be the first company to take a serious look at merging with the mining giant; Anglo-American made advances to Xstrata in 2009 but was rebuffed.

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The revenues of the company resulting from such a merger would be a formidable £142bn.

As usual, the announcement on the stock exchange news service added the usual caveats about there being no certainty that any offer will be forthcoming, but we should know for sure by the close of business of March 1st, 2012, if not before.

By 09:02am shares of Xstrata are rising by 12.4% to the 1,258.5p mark, while those of Glencore are moving higher by 3.8% to 448.3p.

AB/JH