UPDATE 1-Glencore talking to investors on Xstrata merger-FT

* Merger cleanest way for Glencore to go public – bankers

* Valuing Glencore is problematic, say bankers

(Adds quote, Xstrata and Glencore declining to comment)

LONDON, May 3 (BestGrowthStock) – European commodities trader
Glencore International [GLEN.UL] is in its second round of
meetings with shareholders over a possible merger with miner
Xstrata (XTA.L: ), the Financial Times said on Monday.

The report said bankers believe a merger is the “clean” way
for Glencore to go public and a merger is the preferred option
for Ivan Glasenberg, chief executive of the world’s biggest
commodity trader. Glencore owns nearly 35 percent of Xstrata.

“Ivan would love to have all the mining assets and the
trading assets combined under one roof,” the FT quoted an
executive familiar with Glencore’s thinking as saying.

The problem, according to bankers for both sides, is valuing
Glencore for Xstrata shareholders as the scale and complexity of
its trading business is unparalleled and it is worth more than
the sum of its parts, the paper said.

The question hanging over Glencore’s initial public offering
(IPO) of at least $35 billion has moved from “if” to “how” and
is likely to happen in 2011 or 2012, the FT said.

Glencore and Xstrata both declined to comment when contacted
by Reuters.

A source told Reuters on Sunday that Glencore was
considering a merger with Xstrata (XTA.L: ) to create a mining and
trading group worth 55 billion pounds ($84 billion).

Speculation about a possible merger with Xstrata first
surfaced in December when Glencore issued $2.2 billion in
convertible bonds, one step towards a possible listing that
could value it at more than $35 billion. [ID:nLDE5BM0K6]

Glencore said in March an IPO may be necessay to press on
with expansion in a cyclical sector after it hit a liquidity
squeeze during the downturn.[IDnLDE6290B8]

British newspaper reports over the weekend said that Goldman
Sachs was working with Xstrata on the prospective deal, with
Deutsche and JP Morgan also advising.

Morgan Stanley and Citigroup were reported to putting
together Glencore’s proposal.

Investing Basics

(Reporting by Rhys Jones; Additional reporting by Eric Onstad;
Editing by Greg Mahlich)
($1 = 0.6556 pounds)

UPDATE 1-Glencore talking to investors on Xstrata merger-FT