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Brazil miner Vale says deal on hold pending Xstrata stakeholder decision

Brazil miner Vale says deal on hold pending Xstrata stakeholder decision

Vale do Rio Doce SA is in advanced talks to acquire Anglo-Swiss miner Xstrata, but the blockbuster deal hinges on a decision by Xstrata's biggest shareholder, Vale chief executive Roger Agnelli said Friday.
Agnelli didn't say what was holding up the deal sought by Vale, but suggested the Brazilian company has done as much as it can in negotiations with Glencore International AG, which owns 34 percent of Xstrata's shares.
"There is a limit and we already arrived there. It's up to them," he told a news conference held to discuss Vale's record 2007 profits and fourth quarter earnings.
Agnelli earlier told analysts that the next step is for Glencore "to say if they want to go ahead or not."
Glencore spokesman Marc Ocskay declined to comment, and a spokesman for Xstrata could not be immediately reached.
Brazilian media have reported that Vale's purchase of Xstrata could cost Vale as much as US$90 billion (euro59.3 billion) in cash and stock.
But the Financial Times newspaper reported that Glencore wants to extend its agreements to sell commodities that Xstrata produces, including coal and nickel.
Agnelli suggested that Vale wasn't willing to compromise on that sales issue, telling analysts that "marketing is very important to us. We want to have a very open and straightforward relationship with our clients."
"The whole question is not just price, but also principles, how to do business," he later told reporters.
Vale still has a good chance of acquiring Xstrata, Agnelli said.
"If we solve some of the principal issues, we are going to be in a position to close the deal," Agnelli told analysts. "Let's be optimistic."
Vale, the world's largest iron ore miner, confirmed last month that it was in talks that could lead to a purchase of Xstrata PLC. Leading Brazilian newspapers reported the price could go as high as US$90 billion (euro59.3 billion), and have suggested that Vale wants to pay as much as US$30 billion (euro19.8 billion) of that amount in stock.
The purchase would be the largest ever made by a Brazilian company. Vale two years ago paid US$17.6 billion (euro11.6 billion) for Canadian nickel miner Inco Ltd.
Agnelli declined to comment Friday on the value of the deal, saying there has been "too much speculation and none of the speculation hit the target."
Agnelli also said Vale remained open to other possible acquisitions.
"Yes, we are talking to others, but that doesn't mean we are going to do anything. We don't have any other proposal on the table," Agnelli said.
Profits for Vale, the world's second-largest mining company after Anglo-Australian BHP Billiton Ltd., soared 31 percent in the fourth quarter of last year on strong worldwide demand for metals and iron ore, steel's raw ingredient, the company reported Thursday night.
Vale's American depository shares were down 6.4 percent in late afternoon trading or US$2.29 (euro1.51) to US$34.83 (euro22.96).
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AP Business Writer Alan Clendenning contributed from Sao Paulo, Brazil.


Updated : 2021-05-19 09:04 GMT+08:00