An all-share merger between mining companies Anglo American and Xstrata would offer some business benefits, but it would not prompt Fitch to upgrade its credit rating on the combined entity. Fitch said there are pressures on both companies' existing credit profiles, as it expects a weak operating performance over the next one to two years. The agency believes any recovery in commodity prices will be weak and protracted. It also argued that a merged group was likely to pursue a more aggressive acquisition and financial policy compared with those which were historically followed by Anglo. Mick Davis, Xstrata's chief executive, recently wrote to Anglo's board proposing a nil-premium "merger of equals" between the two groups, which Anglo rejected, arguing the business had better prospects on a stand-alone basis. Anglo was... [read full story]
