* Anglo seen touting its $2 bln cost savings plan
* Vale, Chinalco seen wary of launching rival bid
* Xstrata may be cautious of dilutive premium bid
* For more Reuters DEALTALKS, click
By Eric Onstad and Victoria Howley
LONDON, June 25 (Reuters) - With Xstrata's merger proposal for Anglo American at a stalemate, Anglo is likely to use a renewed restructuring push to woo its shareholders while Xstrata may face shareholders unwilling to pay a stiff premium for the deal.
Mining group Anglo, which forcefully repulsed Anglo-Swiss rival Xstrata's "merger of equals" proposal on Monday, may enhance its current programme to cut $2 billion of costs to counter Xstrata's estimate of merger synergies worth about half that level.
Anglo's underperforming unit Anglo Platinum is also undergoing restructuring and is shedding around 10,000 jobs.
"Perhaps the most likely defence for Anglo, at least initially, is to attempt to prove to the market that it is in the process of unlocking hidden value within the company," said analyst Christopher LaFemina at Barclays Capital.
Nomura analyst Paul Cliff said Anglo would need more restructuring to convince shareholders.
"If Anglo's board continues to resist Xstrata's merger proposal... then we believe Anglo would need to propose a much more aggressive restructuring plan as a stand-alone entity," Cliff said.
There has been no response from Anglo since Xstrata released the detailed proposal letter it sent to Anglo's board last Wednesday, but a source close to the company said Xstrata's attempt to ratchet up the pressure by revealing the letter changed nothing.
"The strategic case for the combination remains unattractive for Anglo shareholders and the unchanged terms proposed by Xstrata are totally unacceptable," said the source.
WHITE KNIGHT?
Speculation has swirled this week about Anglo receiving a rival bid from Brazil's Vale or from China's Chinalco. However, both companies could be wary after their failed attempts to link-up with Xstrata and Rio Tinto, respectively.
While a full merger may be a stretch, smaller joint venture deals with either Vale or China might be more likely.
China is particularly bitter about being jilted after Rio dropped its $19.5 billion deal and would have to think very hard before sealing a fresh agreement with a big Western firm.
"If you're looking for a white knight and the precondition is that they have money, you go to China. But I would be highly sceptical... I would have thought once bitten, twice shy," said a banker in Asia familiar with the situation.
Anglo already has a link to China. It sealed a strategic alliance with the China Development Bank (CDB) in February 2008 to develop mining projects.
The CDB financed the purchase of a 1.1 percent stake in Anglo in November 2006 by China Vision Resources Ltd, the investment vehicle of Chinese billionaire Larry Yung.
Brazil's Vale has been floated as another possible partner but a company source told Reuters on Tuesday that the firm was not currently looking for a big takeover.
XSTRATA TO PAY PREMIUM?
A major question is whether Xstrata will be able to meet Anglo shareholder demands to pay a stiff premium.
"We sense that Anglo shareholders are looking for a 30 to 50 percent premium to the current share price for a deal to happen and expect that Anglo shareholders should hold 60 percent of a combined group," said analyst Rebecca O'Dwyer at Investec Securities.
Xstrata has insisted so far that both sets of shareholders would benefit from its "merger of equals" proposal, but it is unclear how much of that is just an opening gambit. Xstrata shareholders are wary about the company overpaying, especially after Rio management got into hot water after bidding up the price for aluminium producer Alcan and paying a rich $38 billion in cash in 2007, at the height of the commodities boom.
LaFemina of Barclays Capital said an all-stock takeover of Anglo by Xstrata at a premium would be dilutive even with forecast synergies of $1 billion because Anglo shares trade at a premium to Xstrata shares.
"There is little chance that Xstrata can offer a cash component so any premium would have to be in the form of more paper, and you have to question whether that is what Anglo shareholders want because the combined entity would be quite heavily indebted," Investec's O'Dwyer said. (Additional reporting by Joseph Chaney in Hong Kong, and Brian Ellsworth and Denise Luna in Rio de Janeiro; editing by Karen Foster)