Glencore, Xstrata merger

If successful a planned merger between mining giants Glencore and Xstrata would create a global commodities group worth $90 billion (68.6 billion euros). Their joint results from 2011 include revenues of $209 billion and adjusted core profits of $16.2 billion.

Xstrata chief executive Mick Davis described the merger as a "logical next step for two complementary businesses."

"A merger offers a unique opportunity to create a new business model in our industry to respond to a changing environment," said Davis.

Mick Davis would be chief executive of the combined firm, which would trade as Glencore Xstrata International PLC.

Glencore CEO Ivan Glasenberg - a billionaire who owns 15.8 percent of Glencore - would become president and deputy CEO of the group.

Glencore says it will issue 2.8 new shares for each Xstrata share in the deal described by the two firms as a "merger of equals."

Fit to compete

The new company is expected to make structural savings of at least $500 million to make it more competitive.

It is forecast to increase production by 11 percent annually to 2015.

Glencore sells metals, crops and fuels in the financial markets, and invests in mining companies. Xstrata owns huge reserves of coal, copper and nickel in Africa, South America and central Asia.

Together they hope to compete with mining sector leaders BHP Billiton, Vale and Rio Tinto. They are expected to use their combined strength to promote other merger deals, including a possible takeover of the Anglo American mining corporation.

Shareholders will be able to vote on the merger in April, after Glencore's full year results have been published. Xstrata has already released results, citing a 20 percent increase in profits for 2011 to $5.9 billion.

But at least two top Xstrata shareholders say they will oppose the deal, and according to reports in the British media, the European Commission's competition watchdog may want to investigate its implications.

Author: Uwe Hessler (AFP, Reuters, dpa)
Editor: Zulfikar Abbany