Anglo American rejects Xstrata approach

Anglo American has rejected an approach from its rival, Swiss-based international mining giant Xstrata, calling its proposal to merge "totally unacceptable". ┬á  Anglo American said that yesterdayÔÇÖs proposals, which Xstrata called a ÔÇ£merger of equals" between ÔÇ£two world-class companies" lacked "strategic merit". ┬á In a statement, Anglo American said its board has ÔÇ£regularly reviewedÔÇØ its strategic options, including the possibility of a merger with Xstrata, in order to progress its objectives. However, it has now concluded that such a move would profoundly impact the nature of its portfolio, in particular by reducing its exposure to the platinum, iron ore and diamond markets.┬á Prior to the rejection, industry analysts had suggested that combining the two companies could make financial sense in terms of cost-savings; however, Anglo American today refuted this claim, saying that its current asset optimization and procurement strategy is already set to make ÔÇ£substantial savingsÔÇØ that will benefit its shareholders.┬á Analysts are predicting that Xstrata could now struggle to fund a merger, given that hostile takeovers generally attract higher political and administrative costs, and that, rather than upping its offer, Xstrata will take its case directly to Anglo AmericanÔÇÖs board in the hope of being able to have some direct influence.┬á Xstrata had to call off its proposed takeover of iron ore exporter Vale SA earlier this year after the two companies were unable to agree terms. *┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á *