MINER Xstrata pulled out of its bid to create a “mining super-major” with rival Anglo American yesterday, in a climbdown for its chief executive Mick Davis. <br /><br />The group decided not to make a formal offer for Anglo after the Takeover Panel issued a “put up or shut up” ruling. It proposed a nil-premium “merger of equals” to create a £60bn mining giant that would have rivalled Rio Tinto and BHPBilliton.<br /><br />Anglo snubbed the original offer in June, saying it massively undervalued the company, and the arrival of new chairman Sir John Parker created further resistance to the offer.<br /><br />“The Kraft/Cadbury talks were also a huge deciding factor in rejecting the bid,” one industry source said. <br /><br />“Shareholders saw a merger which would fundamentally change the company which was being bid for, and realised a premium should be paid for such a big merger”.<br /><br />Analysts said Xstrata, which has $13.1bn (£8.1bn) of debt, had insufficient funds to offer the premium of up to 30 per cent demanded by some Anglo shareholders.<br /><br /> However, Xstrata said it would not rule out a future bid for Anglo. <br /><br />“The compelling strategic rationale for a merger remains undiminished,” said Davis, who grew Xstrata through a series of daring deals.<br /><br />Xstrata’s withdrawn proposal for Anglo follows an unsuccessful offer for Lonmin – it dropped a $10bn cash bid last year amid the global downturn – and the failure of talks which could have seen a tie-up with Brazilian giant Vale.<br /><br />Anglo, meanwhile, under the leadership of Parker and chief executive Cynthia Carroll, will now seek to “set out its value” to its shareholders.<br /><br />Parker, who took office in August, is understood to have convinced several major Anglo shareholders that had been wavering on Xstrata’s proposal to give Anglo more time to deliver its promised $2bn in cost cuts by 2011.<br /><br />“The fact that Anglo’s share price dipped just marginally on the news that the merger had been called off, shows how valuable the miner is in its own right,” Edison’s Charlie Gibson said.<br /><br />An Xstrata–Anglo tie-up would have created one of the biggest producers of zinc, platinum, coal and copper in the world.