Xstrata plunges as £45bn Vale tie-up talks collapse

Mining giant Xstrata's shares crashed 12% today on news that long-running £45 billion takeover talks with suitor Vale of Brazil have collapsed.

The shares tumbled 446p to 3270p after the companies said they had failed to agree on a deal price.

"While Vale and Xstrata continue to believe that a combination of the two companies could realise significant value for both sets of shareholders, we have not been able to reach agreement," said Xstrata chief executive Mick Davis. "We have therefore mutually decided to cease discussions."

However, Companhia Vale do Rio Doce, the world's biggest iron-ore producer, blamed opposition from London-listed Xstrata's largest shareholder. Vale chief executive Roger Agnelli said: "We can resume negotiations at any moment."

Agnelli added that Swiss trading firm Glencore, owner of 34% of Xstrata, was demanding the right to sell commodities produced by the combined companies.

Vale had boosted its offer for the world's biggest exporter of power-station coal to $90 billion (£45.2 billion) from $78 billion, according to reports in Rio. A successful takeover would have helped Vale pass BHP Billiton as the world's biggest mining company, boosting production of copper, coal and zinc as demand from China drives prices to records.

Rio is still fighting off a $130 billion takeover offer from BHP, which it says undervalues the company.

Mining-company mergers and acquisitions rose to a record $158.9 billion last year and may reach "astronomical levels" in 2008, PricewaterhouseCoopers said this month.