Xstrata shares soar on news of $80bn Glencore merger

Glencore and Xstrata are in advanced talks about a $80bn merger that could reshape the mining industry.

The long-awaited merger would combine the forces of the world's largest commodities trading house with one of the biggest miners of thermal coal and copper.

Bloomberg reports a deal could be announced as early as next week ahead of Xstrata's annual results on Tuesday, according to a person familiar with the discussions.

"The companies are closer to a merger than [at] anytime in the last five years," the person with knowledge of the conversations said. "Nothing is firm, however," the person added.

This morning Xstrata confirmed it had received an approach from and was in discussions with Glencore over an all-share merger of equals. Glencore must now clarify its intentions by 1 March at the latest.

Xstrata shares rose as much 13% to £12.54 on the news, with Glencore shares up 5% at 454p.

Ivan Glasenberg, chief executive of Glencore, has been pushing for a deal for the last five years, but Mick Davies, his counterpart at Xstrata, has resisted such a move, arguing the world's largest trading house was a difficult company to value.

The $10bn flotation of Glencore last May put a valuation on the company, however, paving the way for the current merger talks, according to Bloomberg. 

Glasenberg told the Financial Times last year ahead of the IPO that combining with Xstrata, the London-based miner in which the trader owns a 34% stake, made strategic sense.