Zug, Switzerland — 10 September 2012 – Commodity trading giant Glencore International plc has raised its offer for global miner Xstrata to salvage a bid, now worth about US$37 billion, that appeared to be heading for the rocks after Xstrata shareholder Qatar held out for more.
Reuters quotes Xstrata as saying that Glencore was now proposing to offer 3.05 new shares for every Xstrata share, up from 2.8, with Glencore chief executive Ivan Glasenberg to become CEO of the combined group, instead of Xstrata boss Mick Davis as originally envisaged.
With revenues in excess of US$200 billion “Glenstrata,” as it has been dubbed, would become the 4th largest miner on the planet. Xstrata is the world’s biggest exporter of thermal coal and the fourth-largest copper producer and under Davis has gone from having a fewer than 2,500 employees to a workforce exceeding 70,000 in 20 countries.
Xstrata said Glencore was also suggesting a possible change to the structure of the deal that could allow it to pass more easily with a simple majority of shareholders.
Glencore’s bid had been teetering on the brink of collapse after Xstrata’s second-largest shareholder, Qatar, with 12%, said it would vote against the deal unless it was improved.
Glencore chairman Simon Murray earlier cancelled a meeting with shareholders here that had been called to vote on the merger, saying there had been overnight developments.
Under the deal’s original structure, holders of just 16.5% of Xstrata shares would have needed to vote against the tie-up for the deal to collapse, and Qatar said last week it would vote against it, making it very unlikely the bid could have gone through without an improvement.
Glencore left the door open for a change to that structure, as the new bid will consider both a scheme of arrangement, the current structure, and a straightforward takeover. Xstrata’s board and shareholders are expected to resist this change, which would allow Glencore to buy shares offered in to a tender, as non-executives had sought to ensure Glencore would either get full control of the miner or remain at its current shareholding.
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