INTERVIEW-Up to Xstrata to improve Anglo offer-big shareholder

* Old Mutual says Anglo would look at improved proposal

* Xstrata must properly value Anglo's quality assets

* Happy to wait for Anglo's own cost savings to bear fruit

By Eric Onstad

LONDON, July 6 (Reuters) - The board of Anglo American (AAL.L) would surely consider a merger proposal from Xstrata (XTA.L) at a price that recognised Anglo's top-tier assets, major Anglo shareholder Old Mutual said.

But if Xstrata stuck to its "merger of equals" plan, Anglo would be better off remaining independent, Anwaar Wagner, portfolio manager at Old Mutual Investment Group, told Reuters in an interview.

Old Mutual (OMLJ.J) (OML.L), South Africa's largest insurer, has a stake of 3 percent in Anglo, which has rebuffed Xstrata's approach as "totally unacceptable".

"I think it's really up to Xstrata whether they want to come back with an improved proposal that's more acceptable to Anglo American shareholders," Wagner said in a telephone interview from Cape Town late on Friday.

"If the price adequately compensated for the significant dilution of Anglo American's unique exposure to the structurally attractive platinum, coking coal, iron ore and diamond markets, I'm sure the board would consider it."

He declined to say what level of premium would be acceptable.

Xstrata has defended its "nil premium" merger idea, arguing both companies' shareholders would share in what it estimated as $1 billion in synergies, but Wagner said he was prepared to wait for Anglo's own cost-cutting plans to bear fruit.

"Either way, we're happy. We're happy to wait for the value in Anglo to be unlocked over time as a standalone entity and if Xstrata decides to present an attractive offer we will evaluate that as well."

UNDERVALUED

Anglo is "significantly undervalued" due to the scope to increase profits from its own plan to unlock $2 billion in cost savings, its growth projects and attractive industries it is exposed to, he added. According to media reports, some shareholders have been unhappy with Anglo's management, but Wagner said restructuring a big, complex group takes time.

"It's a really large company, and we're just as eager as everybody else to see more improvements and sooner rather than later, but you have to give the current management team a reasonable chance to execute the improvements they have initiated ... during this transition."