Glencore is leaving no stone unturned to woo Xstrata’s investors and shareholders after it received severe criticism from them over aggressive revision of the deal which said that the offer would be increased to 3.05 ratio if Ivan Glasenberg, Glencore’s chief, would be made the head of the combined entity, instead of Xstrata chief Mick Davis.
Glencore also proposed to retain Sir John Bond as the chairman of the combined entity, and Glasenberg also said that he wishes to assume the new role in six months’ time, until which Mick Davis would continue. At the end of six months, Mick Davis would be given a bigger pay-off than £8 million, which is more than what his current contract says.
Gencore has offered further concessions in the deal by offering to keep the original legal structure with the approval from 75% shareholders.
Despite touting the deal to be a “merger of equals” with its revised terms which now make the deal worth £36 billion, Glencore is unable to garner much votes, as yesterday saw activist investor Knight Vinke, opposing the revised terms of the deal. Schroders also backed the opposition.
But Standard Life, Xstrata’s tenth largest shareholder, backed the new terms, and said that it would move to throw out the company’s board if it did not agree to Glencore’s latest offer, adding that the board is acting ridiculously by trying to retain packages of Mick Davis and his management team, while blocking the deal.
Glencore’s revised proposal brings Xstrata’s share capital to £35.6 billion. This means that Glencore is offering a £22.95 billion-all-share deal to buy the group, considering its 34% stake in Xstrata.