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It resembles a scene from Monty Python’s Holy Grail. Anglo American, the London-listed South African miner, peers over the battlements at Xstrata, the Swiss miner hell-bent on a deal. Anglo has cocked a snook but the marauder has not gone away. But pouring veiled insults over the battlements is hardly the solution. Anglo has not produced a convincing alternative to Xstrata’s plan. Meanwhile Vale, the Brazilian miner that once considered buying Xstrata, is raising more cash. Some believe it might be preparing a bid for Anglo’s Brazilian assets or Xstrata itself.
That is unlikely, given the top-of-cycle price Anglo paid for the Minas Rio assets. If Vale wanted Xstrata, it could have pounced earlier this year. Vale’s $1bn convertible is a red herring although it triggered a small pop in Xstrata’s share price on Tuesday.
That leaves Xstrata and Anglo. Both have wooed Anglo’s South African shareholders, which hold about 25 per cent of its equity. The bankers who dine at the same Johannesburg restaurants the companies frequent say Anglo chief executive Cynthia Carroll should at least meet her counterpart, Mick Davis. She has nothing to lose. Or maybe she does. Local shareholders could be tempted by a modest premium from Xstrata, plus a commitment to a continued Johannesburg listing to address exchange control concerns.
Anglo’s management is increasingly seen as an obstacle to a favourable deal – or at least a convincing rebuttal. Sir Mark Moody-Stuart, chairman, half out the door already, is delaying decisive action by hanging round. How different from Rio Tinto, where new chairman Jan du Plessis was a catalyst for change. The first task of an incoming Anglo chairman should be to get Ms Carroll and Mr Davis together. Why wait another day?
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