Glencore, Xstrata Merger Now Complete

old mining hardhat with head lightAfter more than a year of twists and turns and negotiations, the $75 billion merger between Glencore International and Xstrata became official today. The new company will also get a new name later today, Glencore Xstrata PLC.

Glencore Xstrata will be the fourth largest mining company in the world, trailing Vale S.A. (NYSE: VALE), BHP Billiton PLC (NYSE: BHP) and Rio Tinto PLC (NYSE: RIO). Glencore Xstrata also will be the largest commodities trading company in the world.

There already is speculation that Glencore Xstrata will look for another acquisition very soon, while many of its rivals struggle with lower commodities prices and higher costs. A prime candidate appears to be London-traded Anglo American, which currently carries a market cap of around $20 billion, less than half what it was worth less than two years ago.

Glencore has also come under fire recently for hoarding copper at its LME-bonded warehouses, where stockpiles sit at 10-year highs. Glencore and another huge trading house, Trafigura, are said to control about 70% of global supplies of copper, and both have been accused of paying a premium of $100 a ton to the market price of copper to attract more deliveries to their warehouses. The idea, of course, would be to choke off the availability of copper until the price rises and the traders can sell for a substantial profit.

Glencore Xstrata shares begin trading in London tomorrow and on the Swiss Stock Exchange on Monday.


Filed under: 24/7 Wall St. Wire, Commodities, Commodities & Metals, Mergers & Acquisitions, Mergers and Buy Outs, Metals Tagged: BHP, featured, RIO, VALE

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