Glencore – Xstrata merger deal likely to go through

Written on:September 17, 2012
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Mining

Xstrata board warms up for deal closure on Wednesday

On Wednesday, the Xstrata board, chaired by Sir John Bond, is likely to approve the Glencore – Xstrata £36 billion merger with the revised terms, which values one Xstrata share at 3.05 Glencore shares.

Xstrata held a meeting on Friday with independent, non-executive directors to discuss shareholder sentiment. Glencore’s chief, Ivan Glasenberg, at the meeting, reassured Xstrata senior managers that they would be allowed to man the mining assets of the group if the deal became successful.

Meanwhile, the position of Qatar Holding, which owns a 12% stake in the miner and is the second biggest shareholder of Xstrata, remains unclear. Qatar had previously indicated it was holding out for 3.2 Glencore shares for each Xstrata share.

Other investors also made their stand clear with Knight Vinke, which owns 0.5% of Xstrata’s shares, clearly declining to extend its support for the deal. However, Standard Life, Xstrata’s tenth largest shareholder, declared its support for the deal and said that it would oust the board if it does not agree to the latest offer from Glencore.

Mick Davis, Xstrata’s chief executive, was to run the combined group under the original deal. But under the revised terms, Glasenberg will take control, with Davis’ exit after six months. Davis is likely to receive a final payment of at least £8 million and could cash in company shares worth up to £30 million if Glasenberg’s bid is successful.

Davis’ payout is significantly lower than the controversial retention agreements agreed by the Xstrata board for Davis and other company executives when the two groups were considering a “merger of equals”, which received severe criticism from other shareholders.

Related:
Glencore declares final bid offer as £21.8 billion to Xstrata
Glencore revised bid ousts Mick Davis from CEO role of merged entity

     

12 Comments add one

  1. Sam says:

    Oh finally some sense has prevailed into the Xstrata board! Good going!

  2. Peter says:

    Glencore has waited patiently and done all that it could with some obnoxious and adamant shareholders on board. Way to go Glencore!

  3. Lizzy says:

    The revised terms have been accepted. Finally there’s going to be a deal, whether of equals or not, is still debatable.

  4. Mathew says:

    3.05 – the new magic number. Kudos to Glencore for its persistence!

  5. George says:

    Ivan Glasenberg, the man of the hour!

  6. Derrick says:

    Mighty glad to know this. Been following it since June.

  7. Alex says:

    Hopefully no anti-climax before Wednesday’s announcement

  8. Cyrus says:

    Wait until Wednesday. Some other conditions may come up.

  9. Joseph says:

    Qatar is silent on the proceedings. Hope it does not be the spoilsport in the end.

  10. Clara says:

    Glasenberg has managed till now. He’s capable of seeing this deal through.

  11. Steve says:

    I still doubt the shareholders. they may pull out a blooper on Glasenberg anytime before Wednesday.

  12. Andy says:

    It’s almost done. I don’t think there will be anymore glitches to this long drawn out merger drama.

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