Canadian Mining Journal

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NO DEAL – Vale, Xstrata abandon merger talks

RIO DE JANEIRO, Brazil and ZUG, Switzerland - International mining giants VALE and XSTRATA have abandoned discussio...


RIO DE JANEIRO, Brazil and ZUG, Switzerland – International mining giants VALE and XSTRATA have abandoned discussions about merging the two companies into what would be the undisputed world-leading mining company. The decision is said to be mutual, but Vale has reserved the right to bid again for Xstrata.

The two companies began talking in December 2007. Vale offered cash and shares for 100% of Xstrata’s shares in a deal that would have been worth US$90 billion. There is speculation that the talks were scuttled when Vale could not come to terms with GLENCORE INTERNATIONAL (holder of 34% of Xstrata shares) over marketing rights for raw materials.

When news hit that the talks were off, it had an immediate impact on the share prices of the two companies. Vale shares rose 3.5% by about noon on March 26, while Xstrata shares did the opposite, falling 5% or 6% on the London, U.K., market.

In one of the Hot Topic Polls posted earlier this year on the CMJ website, we asked readers if they favoured the Vale-Xstrata merger. More than 50% of those who voted said Yes, and 38% said No.


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