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Xstrata gains bid support

LARGER-than-life Xstrata boss Mick Davies yesterday said he had investor backing from the mining giant&rsquo;s largest shareholder in its proposed &pound;26bn merger with Anglo American.<br /><br />Glencore International is &ldquo;very supportive&rdquo; of the nil-premium merger, Davies said.<br /><br />The chief executive added that the company had no intention of altering the terms of the proposed marriage. Davies dismissed the idea that a premium was being discussed. <br /><br />He said: &ldquo;We are not proposing taking over the company and Anglo shareholders will still own shares in the group. Both can benefit equally from a merger.&rdquo;<br /><br />Xstrata announced earlier this year that it was seeking a &ldquo;merger of equals&rdquo; with its rival Anglo American, headed by embattled Cynthia Carroll. The tie-up would combine assets in Canada, Australia and South Africa and create a group to compete with mining titan BHP Billiton &ndash; the world&rsquo;s largest miner. <br /><br />Davies, renowned for his aggressive management tactics, has said that the tie-up would add $1bn per year to the combined group&rsquo;s pretax earnings within three years. Anglo swiftly rejected the bid when it was tabled in June, saying it undervalued the business. <br /><br />Carroll has since pledged to cut costs by $2bn by 2011 in a bid to reassure investors she is managing the company through the downturn.<br /><br />The news came as Xstrata unveiled its first-half figures; first-half net income fell 77 per cent to $643m (&pound;379m) after a slump in metals prices, while sales dropped 39 per cent to $9.9bn.