Vale, Xstrata Halt Merger Discussions

Xstrata plc and Vale have jointly announced that discussions on a potential merger of the two mining and metals companies have been terminated.

The planned acquisition was for around $90 billion, and would have made the combined company the largest mining concern in the world. Merger discussions betwen the two companies have been taking place over the past three months.

Mick Davis, Xstrata’s CEO, commented: "While Vale and Xstrata continue to believe that a combination of the two companies could realize significant value for both sets of shareholders, we have not been able to reach agreement. We have therefore mutually decided to cease discussions."

Vale had presented a proposal to Xstrata that included a cash and shares offer for all of the Switzerland-based company.

In deciding to halt discussions, Vale notes that it reserves the right to announce an offer or possible offer or make or participate in an offer or possible offer for Xstrata and/or take any other action which would otherwise be restricted under Rule 2.8 of the City Code within the next six months in the event that: an agreement or recommendation from the Board of Xstrata is forthcoming; or there is an announcement by a third party of a possible offer or a firm intention to make an offer for Xstrata or Xstrata announces that it has received an approach in relation to a possible offer from a third party; or Xstrata announces a "whitewash" proposal for the purposes of Rule 9 of the City Code or a reverse takeover; or there is a material change in circumstances.