Glencore, Xstrata Seeking Tieup

February 2, 2012 Updated: February 2, 2012

Commodities giant Glencore International Plc is currently in talks to buy out Xstrata Plc to create one of the world’s biggest mining companies.

Glencore, headquarted in Baar, Switzerland, is already minority owners of the Zug, Switzerland-based Xstrata. It has proposed “an all share merger of equals,” which could value the combined company at 52 billion pounds ($82 billion), according to a statement from Xstrata.

Ivan Glasenberg, Glencore’s CEO, has been pushing for an acquisition for a while, as his company has built up its stake in Xstrata up to 34 percent, most recently.

Amid increasing demand of raw materials from emerging markets, mining companies are seeking to consolidate and boost efficiency. Shares of Glencore rose over 6 percent in London on Thursday, while shares of Xstrata gained more than 10 percent in London.

Analysts say that a combination of the two giants would create a new behemoth, which could snap up smaller competitors, and such a notion also drove up the share prices of rival mining firms, including Anglo American Plc.

“We know that Anglo has potentially been a target before. What would be the next move for a combined Xstrata-Glencore?” wondered Doug Blatch, head of equity trading at Investec Asset Management, in a Bloomberg report. Shares of Anglo rose 3 percent on the London Stock Exchange Thursday.

Xstrata is one of the world’s biggest producers of coal, and has major mining operations in South Africa, Australia, and South America. Combined, the companies would become the world’s fifth biggest publicly listed mining firm.