Glencore and Xstrata confirm $90bn merger

Mining company Xstrata has formally announced its intention to merge with Glencore, the world’s largest commodities trader, creating a commodities 'powerhouse'.

The deal this morning means the combined business would be worth $90bn (£56bn) of which Xstrata makes up $39bn, the BBC reported.

The deal values Xstrata shares at £12.90 compared with the £11.00 which they traded at before the announcement of the deal last week.

The deal comes as Xstrata reveals its profits climbed 20% in 2011, to $5.9bn (£3.8bn).

Xstrata shareholders will be allocated a 45% stake in the new firm.

Chief executive of Xstrata, Mick Davis, will head up the new firm and Glencore's boss Ivan Glasenberg will be deputy CEO.

The deal was described as a "merger of equals" with the new company to be named "Glencore Xstrata International PLC".

Glasenberg described the merger as a "new powerhouse in the global commodities business".

The deal comes after Glencore made its initial public offering (IPO) in April last year in a record share offering.