December 03, 2008

Vale Xstrata tie up – Called off

Both Vale and Xstrata announced that discussions regarding a potential combination of the two companies have been terminated by mutual agreement.

Vale said that “It had put forward an indicative proposal to Xstrata Plc that included cash and shares offer for 100% of Xstrata which it believes would have created significant value for both sets of shareholders. Given that an agreement was not reached, discussions between the parties have been discontinued.”

Vale added that “For the purposes of Rule 2.8 of the City Code on Takeovers and Merger, Vale reserves the right to announce an offer or possible offer or make or participate in an offer or possible offer for Xstrata and or take any other action which would otherwise be restricted under Rule 2.8 of the City Code within the next six months in the event that
1. An agreement or recommendation from the Board of Xstrata is forthcoming
2. There is an announcement by a third party of a possible offer or a firm intention to make an offer for Xstrata or Xstrata announces that it has received an approach in relation to a possible offer from a third party
3. Xstrata announces a whitewash proposal for the purposes of Rule 9 of the City Code or a reverse takeover
4. There is a material change in circumstances

Mr Mick Davis CEO of Xstrata said that “While Vale and Xstrata continue to believe that a combination of the two companies could realize significant value for both sets of shareholders, we have not been able to reach agreement. We have therefore mutually decided to cease discussions.”