Glencore and Xstrata have formally announced their “merger of equals” which would value the combined new business at £56bn. Glencore chief executive Ivan Glasenberg said the merger would create “a new powerhouse in the global commodities business”.
This‘Mega Merger’ will surely have a significant impact on commodity prices across the world as yet another monopoly is formed and changes the layout of the playing field once again. More interesting will be the response by the investment banks which have recently also gotten aggressively into the commodities space.
The rumour mill is churning on whether Glencore and Xstrata may now take over Anglo America plc. Xstrata failed in 2009 to convince Anglo to combine in a “merger of equals.” By acquiring Anglo’s assets in diamonds, platinum and steelmaking coal, the Glencore-Xstrata entity would vault past Rio (RIO) and rival BHP, the world’s largest mining company by revenue, data compiled by Bloomberg show.
Over the last 24 months the mining and construction industry has experienced a favourable hiring climate in the first quarter of 2012. The sector made an impressive recovery after 2009, where no other global industry sector has experienced comparable growth rates or volumes.
Euan Corbett our Equities Specialist, predicts 2012 will be another record-setting year for Mining M&A with a heightened pace of deal activity.