Commodities giant Glencore has finally agreed to raise the offer it made to miner Xstrata for the £46 billion merger to go through, raising the offer from 2.8 of its own shares for every Xstrata share held to 3.05.
Glencore’s revision of the offer comes after Qatar Holdings, which holds 12% stake in Xstrata, gave an open statement regarding its disfavour for the merger deal on the current terms.
Under the new proposal, which is projected as a merger between equals and not as a regular takeover, Glencore’s chief executive Ivan Glasberg will be the new CEO of the merged entity instead of Xstrata’s chief executive Mick Davis as planned earlier.
The overnight development occurred as Simon Murray, the chairman of Glencore, told the shareholders at the company’s headquarters in Zug, Switzerland of his decision to present a renewed offer for Xstrata to adjourn its extraordinary meeting.
The revised terms still fall below the initial level quoted by Qatar Holdings, which had wanted a 3.25 ratio. But Qatar recently indicated that it was open to discussion regarding any changes in the terms of the deal, but was not against the deal in principle.
The new proposal for the Glencore – Xstrata merger leaves Qatar with just 12% stake in the miner, to block the merger. According to sources familiar with the deal, the last minute negotiations between Glencore and Qatar started at about 6 am local time in Switzerland, just a few hours ahead of the Xstrata extraordinary meeting scheduled for Friday at 11 am.
The move displays Qatar’s power in the deal, which has put the Middle-East giant in a position to either make the deal or break it. Qatar reached this position by investing $5 billion (£3.13 billion) in Xstrata this year.