8 Feb 2012

Mining company and commodity trader to merge

10:01 am on 8 February 2012

Mining firm Xstrata has formally announced plans to merge with Glencore, the world's biggest commodity trader.

The deal values the combined new business at $US90 billion, of which Xstrata would comprise $US39 billion.

The new group will be the world's biggest exporter of coal for power plants, and the largest producer of zinc.

The announcement came as Xstrata revealed a 20% increase in profits for 2011 to $US5.9 billion.

But the BBC reports it has been given a mixed reception, with two major Xstrata shareholders saying they will vote against the deal because it undervalues their shares.

Between them, Standard Life Investments and Schroders own 3.6% of Xstrata.

Xstrata shares fall almost 5% by Tuesday afternoon.

Glencore was floated on the stock exchange in May last year in London.