Two global resource giants have reached a merger agreement that, if approved, would create the world’s fourth largest mining firm. Glencore International and Xstrata, which owns Canada’s Falconbridge, reached a US$90 billion deal that has been in the works since last spring, the Globe reports.
The new joint firm could immediately rival global mining leaders such as Rio Tinto and BHP Billiton. But regulatory hurdles remain. The Globe’s Eric Reguly says EU anti-trust officials are not likely to challenge the merger, but those in Australia, China, South Korea and Japan could take a hard look, especially given the new joint firm’s dominance in key areas such as coal.
“Regulators everywhere would be crazy not to review the Xstrata-Glencore merger, worth $90b,” Reguly wrote on Twitter. “Its control of some commodities is outrageous.”
Xstrata shareholders, meanwhile, believe the deal undervalues the company, the BBC reports. Several large shareholders are expected to vote against a merger in April. But with Glencore already controlling 38 per cent of the firm’s shares, a shareholder revolt seems unlikely to succeed.