Investor pressure key to Xstrata/Anglo deal

By Eric Onstad

LONDON (Reuters) - Xstrata could wait for shareholder pressure to build on rival Anglo American before considering a premium bid for the group, while Anglo, enjoying share outperformance, is in no hurry to break the impasse.

Two weeks after Anglo (AAL.L) sharply rebuffed Xstrata's proposal for a "merger of equals", a resolution looks a distant prospect.

Since Xstrata (XTA.L) announced it had sent Anglo's board a letter about a possible tie-up, Anglo's shares have performed 13 percent better than its rival's and 9 percent better than the UK mining index .FTNMX1770.

Anglo has shown no signs of utilising takeover rules to force Xstrata to make a bid or walk away, and on Tuesday it declined comment on whether it would seek a "put up or shut up" ruling.

Xstrata needs to decide whether to make a formal offer, but in the meantime it may be banking on pressure from the Anglo shareholders or waiting for the appointment of a new chairman at Anglo to bring management to the negotiating table.

Xstrata declined to comment on whether it would make a formal offer, only saying: "We continue to see it as a compelling transaction and would like to engage with Anglo's board."

Analyst Tom Gidley-Kitchin at Charles Stanley said he believed Xstrata would eventually lay down a formal offer.

"They're not going to walk away. This deal has been talked about for a long, long time and it is Xstrata's one chance to reach the top-tier level of global miners," he said.