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ZURICH: Mining group Xstrata on Sunday confirmed it had made an approach to rival Anglo American about a merger that would create one of the world's biggest mining companies, according to a company statement.
"Xstrata confirms that it recently sent a written proposal to the Board of Anglo American seeking their consideration of a merger of equals of the two companies," the statement said.
According to a report in London's Sunday Telegraph, Xstrata's chief executive Mick Davis wrote to the Anglo American board last week with a view to launching discussions about a possible 41 billion-pound (49 billion-euro, 68 billion-dollar) deal.
The Xstrata statement made no mention of figures, but said it believed a merger would be "highly compelling" which would ultimately "significantly enhance shareholder returns".
"The combination would create a premier portfolio of operations diversified across multiple commodities and geographies, with enhanced scale and financial flexibility to fund future growth," the company said.
"Xstrata has already quantified substantial operational synergies from the combination that are not available to either company operating alone," it said.
Contacted by AFP, a spokesman for Xstrata refused to say if it had already received a response from Anglo American.
Investment banks Goldman Sachs and UBS are believed to be advising Anglo, while Xstrata is being advised by Deutsche Bank and JP Morgan Cazenove.
The activities of the two companies overlap in many areas. Both own coal assets in Australia and South Africa, which suggests a merged group could make big cost savings.
There could also be potential savings across their copper mining operations.
Japanese investment bank Nomura has estimated a potential merger could achieve cost savings of 700 million dollars a year, the Telegraph said. - AFP/de
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