Glencore International Plc (GLEN), the world’s largest listed commodity trader, offered to buy the shares in Xstrata Plc (XTA) that it doesn’t already own to add coal, copper and nickel mines from Africato Asia.

Glencore has made an all-share offer, Zug, Switzerland- based Xstrata said today in a statement to the London stock exchange. Glencore already holds a 34 percent stake in Xstrata and the rest of the company is valued at 21.9 billion pounds ($35 billion) based on yesterday’s closing price.

Joining Xstrata with Glencore, located two miles away in Baar, would reunite two groups which separated a decade ago when Xstrata bought Glencore’s Australian and South African coal mines for $2.5 billion and went public in London. A deal may generate savings of as much as $704 million, Credit Suisse Group AG said in a report in October.

“Glencore being such a dominant trader and marketer of commodities, and Xstrata being such as strong operator of difficult assets, I think it creates enormous value,” Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney, said by phone before the statement. “On one end you have great mining expertise, on the other you’ve got great marketing expertise. Two and two together should make five.”

Xstrata shares rose as much as 14 percent in London and Glencore climbed as much as 5.2 percent. Glencore shares gained 5.5 percent in Hong Kong before they were suspended from trading after Bloomberg reported the potential deal, citing two people with knowledge of the plan. Shares in mining companies in Australia gained the most in more than two weeks as measured by the S&P/ASX 200 Resources index.

There is no certainty that the talks with Glencore will lead to a deal, Xstrata said in the statement.

Anglo American

A deal would be the biggest for Xstrata since it ended a 29.2 billion-pound offer for London-based Anglo American Plc (AAL) in October 2009 after Anglo’s board snubbed the approach. BHP Billiton Ltd. withdrew from what would have been the world’s biggest mining deal, a $66 billion offer for Rio Tinto in 2008.

“Combining gives them that much more scale to compete against some of the bigger players,” including BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO), Cameron Peacock, a Melbourne-based market analyst at IG Markets Ltd. said by phone ahead of Xstrata’s statement.

Glasenberg, Davis

Joining the companies would reunite Glencore Chief Executive Officer Ivan Glasenberg, 55, with his Xstrata counterpart Mick Davis, 53. Glasenberg, a former coal trader who led the company to a $10 billion initial public offering in May, said in August the commodities trader is “aggressively” seeking mergers and acquisitions as market valuations slide.

Glasenberg, a South African native and Australian citizen, is the second-richest person in Australia with an estimated net worth of $7.2 billion, Forbes Magazine said today. Gina Rinehart, the Australian mining heiress and media investor, is the richest person, valued at $18 billion.

Mining takeovers are accelerating as companies struggle to replace depleting deposits and China’s industrial growth stokes metals demand for construction, cars and appliances. Global mining deals swelled to $98 billion last year, the highest level since 2007, from $76 billion in 2010, according to data compiled by Bloomberg. The average premium for takeovers last year was 23 percent, according to the data.

“There’s really nothing technically that should be preventing large-scale M&A activity,” Daniel Rohr, an analyst at Morningstar Investment Services Inc. in Chicago, said by telephone yesterday. “Balance sheets across the industry are in rather rude health and large miners have massive cash balances that seem to grow larger with each passing quarter.”

Net Income

Combined, Xstrata and Glencore would report net income of about $11.2 billion in 2012 and Glencore would control about 65 percent of a merged company, assuming a takeover with no premium attached, Credit Suisse said in October.

Xstrata’s Davis, a South African, built the group through more than $30 billion of deals since its purchase of Glencore’s coal mines and its London IPO in 2002, adding copper, nickel and zinc. His largest deal was the $18.1 billion acquisition of Canadian nickel producer Falconbridge Ltd. in 2006.

He abandoned a hostile bid for platinum producer Lonmin Plc in October 2008 after metal prices plunged and it withdrew from bidding for Australia’s WMC Resources Ltd. in 2005 after being trumped by BHP. Xstrata produced 85.3 million metric tons of coal last year.

More takeovers to follow,

Regards Inca.