Swiss mining firm Xstrata has been given seven weeks to submit a proposal to merge with its rival Anglo American.
The deadline was issued by the Takeover Panel, which oversees mergers, after Anglo American approached it to force Xstrata to make a formal offer.
If Xstrata does not submit a bid by 5 p.m. on November 20, it must walk away from any deal or merger for six months, the panel said.
The move by Anglo American comes three months after Xstrata first approached the company with a merger proposal that valued Anglo American at ┬ú24.8 billion. The London-based firm rejected the bid, calling it ÔÇ£totally unacceptable.ÔÇØ In a statement yesterday, it said: ÔÇ£Nothing since then has changed the Board's view and the Board reiterates its emphatic rejection of Xstrata's approach.ÔÇØ┬á
A merger would make the two groups one of the worldÔÇÖs largest mining companies with a combined market capitalisation of ┬ú43 billion.
Zug, Switzerland-based Xstrata is keen to combine its mining operations in South Africa, Canada and Australia with Anglo American projects nearby, which would result in cost savings of around £600 million.
Cynthia Carroll, Anglo AmericanÔÇÖs CEO, has referred to the proposed merger as a ÔÇ£distractionÔÇØ, as she makes plans to cut costs across the firm and increase its metal output. It is understood that although the companyÔÇÖs investors have so far backed a rejection of XstrataÔÇÖs bid, Carroll has come under increasing pressure to prove that the company can deliver value on a stand-alone basis.
Anglo AmericanÔÇÖs chairman Sir John Parker, said of the decision: ÔÇ£Having reviewed with management and advisors the value creation potential at Anglo American relative to XstrataÔÇÖs merger proposal and having met our shareholders in the UK, South Africa and USA, we have reaffirmed our conclusion that XstrataÔÇÖs proposal is not in the interests of our shareholders.
ÔÇ£We have made our position on XstrataÔÇÖs proposal very clear and we welcome the PanelÔÇÖs decision today.ÔÇØ┬á
Xstrata walked away from a bid for London-based platinum miner Lonmin last October after the Takeover Panel issued a similar deadline.
One of the worldÔÇÖs largest mining groups, Anglo American, which employs around 100,000 people, has operations in Africa, Europe, South and North America, Australia and Asia.
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