Xstrata has withdrawn its proposed £56 million bid to merge with Anglo American, it emerged today (15th October).

The diversified Swiss miner confirmed its intention to pull out of the deal five days ahead of the expiry of a 'put up or shut up' ultimatum dictated by Takeover Panel regulations.

As a result, Xstrata, which originally outlined its plans for a merger of equals in June, must now refrain from attempting to bid for its rival for at least six months.

However, Chief Executive Mick Davis maintained that the transaction would have created a "super-major with the scale and diversity to compete in the evolving global mining sector".

He said: "The compelling strategic rationale for a merger of the two companies remains undiminished and has been recognised by shareholders of both companies.

"As previously announced, a merger would deliver over $1 billion of quantified pre-tax synergies per annum by the third full year following completion. Cost savings measures by either company alone, while commendable, simply cannot realise this value."

Mr Davis added that Xstrata will assess a "range of alternative growth options" and reaffirmed that it is well-placed to deal with the effects of the economic downturn.

A spokeswoman for the firm also refuted suggestions that an inability to raise the necessary cash was the main reason behind the early withdrawal from the deal.

Earlier this month, Anglo American Chairman Sir John Parker welcomed the Takeover Panel's intervention, claiming that the proposal had no "strategic merit" for his firm.

In a statement following the announcement of the collapse, he took the opportunity to restate his belief that the company can offer value by remaining independent.

"The board continues to have full confidence in the value inherent within the group's unique asset base and the additional value that we can drive from it," he said.

"I look forward to working with the management team to deliver this value for our shareholders."

Last year, Xstrata was also forced to shelve plans for a £5 billion takeover of Lonmin, which is the world's third-largest platinum producer.

Sources:

No intention to make an offer FOR ANGLO AMERICAN (15/10/09)

Xstrata walks away from Anglo American bid (15/10/09)

Anglo American notes announcement by Xstrata (15/10/09)

Xstrata walks away from Anglo bid (15/10/09)

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