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Brazil's Vale halts talks to acquire Anglo-Swiss miner Xstrata

Brazil's Vale halts talks to acquire Anglo-Swiss miner Xstrata

Brazilian mining giant Companhia Vale do Rio Doce SA on Tuesday announced that it halted negotiations to acquire Anglo-Swiss miner Xstrata PLC in a deal reportedly worth as much as US$90 billion (euro58 billion).
Vale said in a statement that talks were discontinued after Xstrata failed to agree to its latest offer of cash and stock. The company said it reserves the right to make a new offer within six months.
Vale, which did not disclose the value of the deal, said the acquisition "would have created significant value for both sets of shareholders." Brazilian news media previously reported the deal was worth as much as US$90 billion (euro58 billion).
"While Vale and Xstrata continue to believe that a combination of the two companies could realize significant value for both sets of shareholders, we have not been able to reach agreement. We have therefore mutually decided to cease talks," Xstrata Chief Executive Mick Davis said in a separate statement.
The Financial Times newspaper reported last month that one of the sticking points in the deal was that Xstrata's controlling shareholder _ Glencore International AG _ wanted to extend its agreements to sell Xstrata-produced commodities, including coal and nickel.
Vale chief executive Roger Agnelli suggested last month that Vale was not willing to compromise on that sales issue, telling analysts at the time that "marketing is very important to us."
"We want to have a very open and straightforward relationship with our clients," he said, later telling reporters that "the whole question is not just price, but also principles, how to do business."
The purchase would be the largest ever made by a Brazilian company. Two years ago, Vale paid US$17.6 billion (euro11.3 billion) for Canadian nickel miner Inco Ltd.
Vale first announced it was in talks to buy Xstrata in January.
The Brazilian company is the world's largest iron ore producer and the planet's second-largest nickel producer. It also is Brazil's largest logistics company, operating an extensive network of railroads and ports. The company is a frequent target of left-leaning groups who contend Brazil should have not allowed the privatization of the company in the 1990s.
The union between Vale and Xstrata would make it the world's fourth-leading copper producer and a big player in the coking coal segment. It would be a leader in iron ore, nickel and thermal coal.
Since Vale announced it was in talks with Xstrata, the Brazilian company's share price has declined while that of UK-listed Xstrata has risen, along with commodity prices.