UK-based mining company Anglo American Plc has rejected the merger proposal of Switzerland-based mining group Xstrata plc (Xstrata), calling the combination "unattractive" and not in the interests of its shareholders, and saying that the terms proposed by Xstrata were "totally unacceptable."
Anglo American's board has concluded that the merger 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 while increasing exposure to nickel and zinc," reads the company's release.
According to reports, Xstrata has been disappointed by Anglo American's rapid rejection of its proposal for an all-share merger of equals, and was surprised that its board did not see fit to engage with Xstrata to discuss its proposal.
As SteelOrbis previously reported, last weekend Xstrata approached its rival Anglo American with a merger proposal. The proposed merger would have created a group with a combined market capitalization of $67 billion which would control 11 percent of the global metallurgical coal market, according to Australian market and technical analysis firm AME Mineral Economics. That figure would make it second only to BHP in terms of coking coal production.
According to the analysts, Anglo America was unlikely to accept Xstrata's merger proposal unless it could secure a large premium or retain control.