200906241415.en[1] - 1 NOT FOR RELEASE, PUBLICATION OR...

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Unformatted text preview: 1 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION NEWS RELEASE XSTRATAS PROPOSED MERGER OF EQUALS WITH ANGLO AMERICAN Zug, 24 June 2009 Xstrata plc (Xstrata) notes the response by Anglo American plc (Anglo American) on 22 June 2009. Xstrata today publishes the letter sent to the Board of Anglo American on Wednesday 17 June 2009, which sets out the highly compelling rationale for an all-share merger of equals, in which both sets of shareholders would share equally in the substantial benefits of a combination (see Appendix I). Additional points to note: The proposed transaction is a merger of two companies of equal size where both sets of shareholders will share equally in the benefits which flow from that combination. The proposal bears none of the characteristics of a takeover, in which a premium would typically be payable. The combined group would have a Board and a management team sourced from both companies to bring together the team best capable of delivering the synergies and other benefits of the merger. This merger is the natural combination of two highly complementary companies in the mining industry to realise significant value for both companies shareholders. Both companies have very similar market values 1 , financial positions, asset qualities, reserve and resource lives and aggregate earnings estimates. The strategic rationale for a merger is very compelling, based on the two companies: o contiguous or proximate assets in Australia, South Africa and South America; o shared ownership of Collahuasi copper and Cerrejn coal operations; o broad geographic distribution of operations and projects; o complementary portfolios of commodities; and 2 o ability to optimise each companys significant portfolios of organic growth options to enhance returns equally to shareholders of both companies. Significant pre-tax synergies have been quantified of over US$1 billion per annum by the third full year following completion of the proposed merger. Gross one-off realisation costs of not more than US$500 million in total will be incurred in full in the first two years following completion 2 . Xstratas estimate of these core synergies has been reported on under the City Code on Takeovers and Mergers by Ernst & Young LLP and Xstratas financial advisors, Deutsche Bank and J.P. Morgan Cazenove. Copies of their letters are included in Appendix III. Xstratas synergy estimate does not assume nor envisage any workforce retrenchments at the combined groups South African operations and Xstrata believes that South Africa would be a net beneficiary of the transaction....
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This note was uploaded on 05/12/2010 for the course ECMT 1020 taught by Professor Bo during the Three '10 term at University of Sydney.

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200906241415.en[1] - 1 NOT FOR RELEASE, PUBLICATION OR...

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