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Xstrata 'unlikely' to make hostile bid for Anglo

The company is not likely to start a hostile bid for Anglo American even though a takeover might create savings of as much as $11.7 billion.

Posted: Wednesday , 17 Jun 2009

Xstrata Plc, the biggest exporter of coal used by power plants, is unlikely to start a hostile bid for Anglo American Plc even though a takeover might create savings of as much as $11.7 billion, a newswire service reported.

According to the newswire service a merger would also cut the value of Xstrata shareholders' holdings because of the company's lower price-earnings ratio relative to Anglo, it said.

Previous reports show that Anglo investors want Chief Executive Officer Cynthia Carroll to study a merger with Xstrata. Anglo is "very strongly" supported by shareholders and the company has a "clear growth strategy," the company said in an e-mailed response to the report.

A report said that synergies from a deal would total $8.6 billion to $11.7 billion, "These synergies will not be realized in the near term due to the various difficulties and attitudes towards the deal."