Xstrata resumes wooing Anglo with $1 billion synergies

By Eric Onstad

LONDON (Reuters) - Mining group Xstrata (XTA.L: Quote, Profile, Research) put more pressure on takeover target Anglo American Plc (AAL.L: Quote, Profile, Research) to come to the negotiating table on Wednesday, releasing details of its proposal which includes cost savings of $1 billion.

The Anglo-Swiss firm also attempted to reassure South Africa, whose mining minister has strongly criticized the plan, by pledging a merger would not add to the country's high unemployment.

Anglo (AGLJ.J: Quote, Profile, Research) on Monday rejected a proposed "merger of equals" floated by Xstrata one day earlier, saying the idea lacked strategic rationale and that the terms were "totally unacceptable."

Anglo was not immediately available to comment on the letter it received dated June 17, but analysts said it was unlikely to change its stance.

"I think the Anglo American board has made its position perfectly clear that really there is no reason for them to entertain any discussions with Xstrata," said analyst Charles Kernot at Evolution Securities.

"BMO Research expects that Anglo American would continue to reject the overture and that Xstrata may respond with a hostile bid," analyst Tony Robson of BMO Capital Markets said in a note.

Anglo's shares extended gains, jumping 10.1 percent to 1,819 pence by 1456 GMT (10:56 a.m. EDT), outpacing a 5.8 percent increase in the UK mining index . Xstrata shares added 5.9 percent.

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