UK regulators said Xstrata must make a formal takeover bid for rival miner Anglo American by October 20th or walk away for six months as Anglo again rejected a merger.
Anglo first snubbed a "merger of equals" proposal from Xstrata in June and many of its shareholders have said Anglo-Swiss Xstrata must offer a premium for any bid to succeed.
"Xstrata must, by 5.00pm on 20 October 2009, either announce a firm intention to make an offer for Anglo American . . . or announce that it does not intend to make an offer for Anglo American," the UK Takeover Panel said in a statement today.
Anglo's new chairman John Parker has been consulting with shareholders about Xstrata's "nil premium" merger plan, which the firm said was "totally unacceptable" on June 22nd, one day after Xstrata unveiled its plan.
"Nothing since then has changed the Board's view and the Board reiterates its emphatic rejection of Xstrata's approach," Anglo said in a statement.
"Anglo American believes it is in the interests of the group and its shareholders that this period of uncertainty is brought to an end." Mr Parker said on July 20th that there was "clear value gap" in Xstrata's proposal and that it was a "distraction" for management.
Xstrata has said it wants to engage with Anglo management to discuss possible merger synergies it has estimated at $1 billion, which it said would be in addition to an Anglo programme to cut cost by $2 billion by 2011.
Xstrata also says that bringing together the fourth and fifth biggest diversified mining firms by market value would create a group better able to compete against rivals BHP Billiton and Rio Tinto.
A combination of the two firms would create the world's biggest producer of zinc, platinum, coal for power stations and ferrochrome and the second-biggest in coal for steelmaking and copper.
Reuters