When it comes to global commodities trading, Glencore (PINK:GLCNF) is one of the top operators, with more than $145 billion in revenues. And it might be getting even bigger.
According to various reports, it looks like the company is close to a mega-merger with mining group Xstrata (PINK:XSRAF). The result would be a combined operation with a value of roughly $80 billion, making it the third-largest miner in the world. The two top players are Rio Tinto (NYSE:RIO) or BHP Billiton (NYSE:BHP).
As for Xstrata, it has extensive operations across 20 countries, with reserves in coal, copper and zinc. Glencore already holds a 34% interest in the company and has made no secret of its goal of some type of merger. A merger would likely include nice cost synergies, as well as benefits from a higher-margin business.
But a deal still could prove difficult. Negotiations likely will be contentious when it comes to valuation and control issues. What’s more, there might even be antitrust problems. Keep in mind that the EU recently blocked the $7.4 billion proposed merger between the NYSE (NYSE:NYX) and the Deutsche Börse.
– Tom Taulli, InvestorPlace.com
Comments are currently unavailable. Please check back soon.