LONDON--Newly-minted commodities titan Glencore Xstrata PLC
(GLEN.LN) Tuesday sought to reassure investors that its recent
$44.6 billion Xstrata purchase will bear fruit through
significantly higher-than-expected synergies and reduced capital
expenditure.
The Baar, Switzerland-based trader and producer of a wide range
of commodities said it now expected to deliver at least $2 billion
in synergies in 2014 as a result of the deal, four times as much as
it had initially estimated.
The company has identified $450 million in annual synergies to
come from marketing activities, $175 million from financing
synergies and $1.4 billion through cost savings.
"A significant portion of the synergies are in overhead costs at
head and regional offices. We are only just starting to
comprehensively look at the combined mining and metallurgical
operations," said Chief Executive Ivan Glasenberg.
Glencore finally completed its all-share purchase of Xstrata in
May, the largest acquisition in mining history, after a protracted
courtship that some analysts said forced Mr. Glasenberg to
potentially over-sweeten his terms. Nearly four months after the
deal was completed, falling commodity prices and a more
conservative reassessment of Xstrata's operations led the company
to write down its purchase value by $7.7 billion and report a net
loss of $8.92 billion for the first six months of the year.
Mr. Glasenberg said more fat could be cut from the enlarged
firm. The company is reducing its capital expenditure by $3.5
billion for the 2013-2015 period.
The company also confirmed that it intends to make an
application to the Johannesburg Stock Exchange for a secondary
listing, which is expected to become effective during the fourth
quarter of 2013, subject to certain approvals.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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