Vale takeover of Xstrata reaches impasse

Vale’s takeover talks with Xstrata appear to have reached an impasse despite the fact that all parties, including Xstrata’s biggest shareholder, Glencore, are keen for the acquisition to proceed.

Analysts are expecting the Brazilian mining group to pay over $100 billion for Xstrata, however, a problems has arisen because of movements in the share price of both firms.

Following the commencement of talks in late January, Xstrata shares have risen 13%, while Vale’s stock has remained static.

It is understood that the share values are central to negotiations because Vale would pay for more than half of the value of Xstrata with its stock.

It is reported that Vale is offering £40 but Glencore, which holds a 35% stake in Xstrata, is looking for £45 to £48.

Vale is seeking to diversify its business, which is mainly iron ore, and a merger with Xstrata would expand its presence in copper and nickel.

In fact, the combined firm would be the world’s largest nickel producer, ahead of Norilsk Nickel of Russia.

Should the deal proceed, Glencore plans to roll over its supply agreements with the merged firm and possibly expand them.

The acquisition could be the largest ever made by a Brazilian company.