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Speculation mounts over merger between Glencore and Xstrata

The Xstrata company, one of the world's largest global diversified mining businesses, confirmed on Thursday that it had been approached by Glencore International, one of the world's leading integrated producers and marketers of commodities, with regard to a possible merger of the two companies.
 
Apparently Xstrata decided to confirm Glencore's approach following rumours emanating from the Bloomberg news agency. However, Xstrata did not confirm that an offer had been made, merely stating that further announcements would be made when appropriate. What is clear is that Glencore, whose name is an acronym of "global energy commodity resources", already owns 34.4% of Xstrata's shares.
 
If the companies did merge, it would mean the companies would return to being part of the same company again. Xstrata plc was set up in 2002 at a time when it also acquired the South African and Australian coal assets of Glencore at a price of $ 2.5 billion.
 
While both companies went their separate ways over the past decade, they remained closely linked, with Xstrata's headquarters in the city's Bahnhofstrasse barely 2 kilometres from Glencore's headquarters in Baarermattstrasse in Baar.
 
According to analysts, a merger could bring savings of up to CHF642 million. As a result of the speculation, Xstrata shares had risen by 13% as of 10 am on Thursday with Glencore shares rising by 5%.
 
Xstrata, whose current chairman is Sir John Bond, employs some 70,000 in 20 countries and in 2010 the company achieved a turnover of $30,499m with a profit of $4,254m. Glencore, whose current non-executive chairman is Simon Murray, employs some 2,700 people in marketing operations with over 54,800 employed directly or indirectly in its industrial operations in 30 countries. In 2010 its turnover amounted to $144,987m and it recorded profits of $5,290m.


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