Glencore International is nearing an agreement to combine with Xstrata in a deal that may value the combined entity at 52 billion pounds ($82.46 billion), Bloomberg reported on Thursday, sending Glencore shares sharply higher in Hong Kong.
The companies may announce a deal as early as this week, Bloomberg said, citing two people with knowledge of the plan. Glencore's Hong Kong-traded shares gained as much as 6 percent in mid-afternoon, before trading was suspended and ahead of their London opening.
The talks between Xstrata and Glencore, both based in Switzerland, are ongoing and a deal could still fall apart, one of the people told Bloomberg. The deal value excludes the value of Glencore's 34 percent stake in Xstrata, the report said.
Glencore, the world's largest diversified commodities trader, raised about $10 billion in an initial public offering in London and Hong Kong last year, setting aside a large chunk of the proceeds for takeovers.
Analysts and investors have long speculated over a tie-up between Glencore and Xstrata, particularly after the IPO since it would give the company, led by Chief Executive Ivan Glasenberg, a way to fund takeovers with its own stock.
In an interview with the Financial Times last year, ahead of the IPO, Glasenberg said there were a lot of benefits and synergies in putting the two companies together. He has since denied firm talks over a combination.
Glencore spokesman Simon Buerk had no comment on the Bloomberg report when contacted by Reuters. Xstrata also declined to comment.
($1 = 0.6306 British pounds)
(Reporting by Elzio Barreto in Hong Kong and Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman)