Xstrata rejects $76 bln bid approach from Vale: report

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The newspaper quoted people close to the matter as saying London-listed Xstrata and its 35-percent shareholder, Swiss commodities trader Glencore, were holding out for a price equivalent to about 45 pounds a share.

Xstrata declined to comment. Glencore was not immediately available for comment. Vale could not immediately be reached.

"The two sides are nowhere near to an agreement," the Financial Times quoted a person close to Vale as saying, who added that the Brazilian group was "close to walking away from the whole thing."

Shares in Swiss-based Xstrata fell in early trading and at 3:10 a.m. EST were down 1 percent at 37.67 pounds.

Tobias Woerner, mining analyst at MF Global Securities in London, said Vale might have to bid well above 45 pounds a share to win over Xstrata's other shareholders.

"I would want to have closer to 50 (pounds) if not above. Glencore may have different views, because it can gain from the marketing agreements of the enlarged group," he said.

The Financial Times said Vale, the world's biggest producer of iron ore, planned to use $50 billion of bank finance to fund the cash portion of its proposed bid and to pay the rest in preference shares.

MERGER WAVE

Vale said last month it was in talks over a possible bid for Xstrata to diversify its mining interests. A deal would give it significant production of copper and zinc and also lift it ahead of Russia's Norilsk Nickel to become the world's biggest nickel miner.

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