News

June 27, 2009

That Was The Week That Was ... In London

By John Taylor

In London it was a sideways week for the mining sector as a whole. The FTSE 100 stocks were off by 0.7 per cent in spite of Xstrata's (LSE: XTA) proposal to merge with Anglo American (LSE AAL), whereas the smaller companies gained an average of 1.6 per cent.

The big news was Xstrata's proposed merger with Anglo American. Xstrata has proposed a "merger of equals", as this avoids the need to pay a takeover premium. However, Anglo American's immediate response was to reject the proposal and so Xstrata will have to do it the hard way - presumably involving some additional incentive to bring Anglo shareholders onside. It remains to be seen how much incentive is needed, but the prospect of Anglo's assets being run by Xstrata's much more...