Xstrata has confirmed that it has formally approached rival Anglo American seeking a proposed £41bn merger, causing Anglo American’s shares to jump 10%.
Xstrata sent a written proposal to the board of Anglo American seeking its consideration of a merger of equals, saying that the deal is “highly compelling”.
Xstrata has been under pressure to propose discussions from two of its biggest shareholders, Black Rock and Capital Group, according to The Sunday Times.
Xstrata said the merger would create a diversified portfolio across different commodities and geographies, providing enhanced scale and financial flexibility to fund future growth.
Both companies have similar stock market values and trade on similar ratings.
If the merger goes ahead, it is expected to provide cost savings of up to £400m, The Sunday Times reported.
Anglo American’s market capitalisation is £21bn.
Xstrata is one of the biggest miners in Australia and the biggest thermal coal exporter in the world.