Can Cynthia Carroll, chief executive of Anglo American, see off Mick Davis, her counterpart at Xstrata? Last week Davis made Anglo his latest prey when he wrote a letter proposing a nil premium merger. It pitched the mining world’s only female chief executive against its biggest corporate bruiser.

It comes at a time when Carroll is under pressure at Anglo. She has made enemies within the company since she joined two years ago; some big investors believe she has been slow to deliver the cost savings she promised and others on the board are openly hostile.

Her position is made weaker because by the end of this summer the chairman who recruited her, Sir Mark Moody-Stuart, will be replaced. Several candidates have already been shortlisted and Anglo’s investors are looking for strong new leadership. Whoever becomes chairman, his or her first priority will be to decide whether to back Carroll or replace her.

It is as simple as that.

Removing her could be Anglo’s best way of remaining independent. This tactic has been dubbed the Marks & Spencer defence, when you replace your chief executive in the heat of a bid battle and change the dynamics of a company.

The same happened at Amec, the engineering company, when it hired Samir Brikho — the company hasn’t looked back since. Anglo has a treasure trove of assets. Davis knows this and he has the skills to unlock it, which is why he wants to merge with Xstrata and enjoy the synergy benefits.

The sense at Anglo is that Carroll has so far failed to demonstrate the group’s value. She has promised $2 billion (£1.2 billion) of procurement and efficiency savings but these won’t all come through until 2011. She is a tough operator, though, and it would be wrong to write her off. She has achieved a lot at Anglo since she joined, changing the culture and operational performance. Her investors, however, will want to hear how she can accelerate her plan to release more value in the company.

Her priority must also be to sell a half-stake in its Brazilian iron ore project, an ambitious $11 billion programme that is a huge single exposure. And then she has Tarmac to sell, but only when the economy picks up.

Anglo’s investors know something has to change at the company but they are not certain that accepting the Xstrata deal is the right way to address it. A change of management could be the answer, but only if it delivers future gains that exceed those already on the table.

Xstrata is going to play a patient game. Davis knows Anglo is on the back foot but if Carroll goes then that could dash his merger plans. Neither does Xstrata have huge room to manoeuvre. Its corporate acquisitions have, in the past, been financed by debt, but this time it is paper and that is a currency that creates a whole new set of issues.

Bishop’s reign

RUNNING a large group for nearly half a century is unheard of these days, when chief executives are normally happy to last five years. Sir Michael Bishop, who stands down at BMI British Midland this week, having sold his group to Lufthansa after 45 years at the top, is a remarkable exception — and when he says he doesn’t expect any other airline boss to better his length of tenure, you wouldn’t bet against him.

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