June 30 (Bloomberg) -- Xstrata Plc Chief Executive Officer Mick Davis, who’s pursuing a 24 billion-pound ($40 billion) merger with Anglo American Plc, said his attempt last year to acquire platinum producer Lonmin Plc was “one deal too many.”

Xstrata said Oct. 1 it raised its stake in Lonmin, the third-largest platinum producer, to 25 percent to block rival bids while also scrapping its offer as commodity prices plunged.

“We decided to stand back from the transaction; that was a good decision,” Davis said yesterday, addressing a Melbourne Mining Club dinner in London. “What was not so smart was then saying we have to stop anybody else from buying Lonmin. That was not so smart. We didn’t need to do that because the world was dying. When the world is dying there are very few people who want to act.”

Davis, who led more than $33 billion of acquisitions in six years to add copper, nickel, coal and platinum assets, is seeking to combine Xstrata operations in Canada, Australia and South Africa with nearby sites of London-based Anglo. The merger, proposed June 17, would create a company competing with BHP Billiton Ltd., the largest mining group.

“Scale and diversity” are keys to mining companies’ growth,” said Davis, who wouldn’t comment on developments with Anglo. “You have to be doing things to create value.”

Xstrata, based in Zug, Switzerland, said last week a merger would save more than $1 billion annually in the third full year after a deal. Anglo rejected Xstrata’s proposal as “totally unacceptable,” saying it would “significantly” dilute Anglo’s “unique exposure” to platinum, iron ore and diamond markets.

Platinum, Diamonds

The combination of the two companies would have sales of more than $54 billion based on 2008 figures, almost matching those of London-based Rio Tinto Group, the world’s third-biggest mining company.

Anglo controls Anglo Platinum Ltd., the world’s biggest producer of the metal, and owns 45 percent of De Beers, the largest diamond company. It also has copper, coal, zinc and other mines in 45 countries.

Xstrata broke off talks about being acquired by Brazil’s Vale SA, the world’s biggest iron-ore exporter, in April 2008 after they couldn’t agree on terms.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net.

http://bloomberg.com/apps/news?pid=20601110&sid=aXcEBBAi.w.s