Xstrata will continue to seek merger of equals with Anglo American

By Lisa Kerner

Charlotte, N.C., June 24 - Xstrata plc made public its June 17 letter to Anglo American plc outlining Xstrata's rationale for its proposed all-share merger of equals.

Mick Davis, Xstrata chief executive officer, called the combination "a natural fit" and "the most compelling major transaction available in our industry."

In a news release, Davis said Anglo American rejected the proposal without engaging in discussions with Xstrata.

Under the proposal, the combined company's board and management would come from both Xstrata and Anglo American "to bring together the team best capable of delivering the synergies and other benefits of the merger," the letter said.

Xstrata projected pre-tax synergies of more than $1 billion per year by the third full year following completion of the proposed merger.

"The combined group would benefit from enhanced access to capital and improved financial flexibility to resume dividend payments and support further growth whilst maintaining an investment grade rating," Xstrata said in the letter.

"We will continue to seek to engage with Anglo American's board and management to investigate the value that would accrue to their shareholders and to ours from a combination," Davis said.

London-based Anglo American is a mining group with operations in Africa, Europe, South and North America and Asia.

Based in Zug, Switzerland, Xstrata is a diversified mining group.

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