Xstrata Plc, the world's fourth- largest copper producer, rose to a three-week high in London trading after newspaper reports that Brazil's Cia. Vale do Rio Doce may agree to buy the company within the next few days.
Switzerland-based Xstrata gained 0.3% to 3,512 pence on the London Stock Exchange, the highest since January 4, valuing the company at 68 billion US dollars. Xstrata is 34.45% owned by Glencore International AG, the world's largest commodity trader. Vale, the world's biggest iron-ore miner, arranged 50 billion US dollars in financing from a group of up to 12 banks led by HSBC Holdings Plc to fund its bid for Xstrata, the U.K.'s Sunday Times reported Sunday. Vale said on January 21 it had held talks to buy Xstrata. The Rio de Janeiro-based company's Chief Executive Officer Roger Agnelli, who wants Vale to overtake BHP Billiton Ltd. as the world's biggest mining company, is already spending 59 billion US dollars over five years to expand in Canada, Mozambique, Australia and China. But Xstrata may also become a takeover target for Anglo American Plc, the world's second-largest mining company, according to press reports published Monday. However the Brazilian government is against Vale taking over Xstrata as it considers the offer expensive and harmful to the country's interests, local newspaper Valor Economico said on January 24, citing an unidentified minister. Claire Divver, a London-based spokeswoman for Xstrata, declined to comment on the speculation. Glencore spokeswoman Lotti Grenacher in Baar, Switzerland, also declined to comment. Bradesco, Brazil's main private bank which holds a stake in Vale through its holding BrandesPar said a final decision is "still distant" and will depend on several issues including cash flow. "Brazilian government representatives in the board have given the green light for Vale to consider the acquisition", said Lazaro Brandao, president of Bradesco board. Currently Vale "is looking to see if the operation is viable or not, and if there's sufficient cash flow to make it sustainable. Only then will the Brazilian government take a decision". Vale also said that current turbulences in global financial markets are an obstacle and the Brazilian government is not convinced that it's a sound policy, at the moment, to issue shares for the possible acquisition. If the operation goes ahead it would become one of the world's main acquisitions and by far a record for a Brazilian corporation.