Glencore’s chief executive Ivan Glasenberg put down his cards on display yesterday, as he made his final offer to mining company Xstrata of £21.8 billion ($35 billion), in an effort to gather as much support as possible for the Glencore – Xstrata merger.
With the revision in the bid from 2.8 of Glencore’s shares for every Xstrata share to 3.05 ratio, there is now an 80% probability of the merger to go through. Glencore presented the revised bid along with a condition which would see Xstrata CEO Mick Davis exit after six months, handing over the reins of the combined entity to Glasenberg, which scraps the earlier plan of the Xstrata head taking control of the top job.
Mick Davis is willing to forgo his position provided the shareholders get the right bargain, a source aware of the situation said, adding that around 20 people may quit after the merger gets processed.
Under the original deal, Xstrata proposed retention payments totaling £172.8 million ($276 million) for Davis and 72 other executives. Those payments received severe backlash from investors including Standard Life Investments.
Glencore reiterated that it is “content” with Xstrata’s request for the payments. Glencore has asked Xstrata’s board if it needed an more revisions in the executive board payments which included £28.8 million in shares of the combined group to Davis over three years.
The proposal will continue to be considered as merger requiring the approval of 75% shareholders, with Glencore being unable to vote its stake. Glencore can switch to acquisition mode if it can garner more than 50% shareholders with the consent of the UK acquisition panel and Xstrata.