London, England — 02 October 2012 – Terms for a proposed US$33 billion merger of mining giant Xstrata with global minerals trading group and miner Glencore have been agreed by the companies – an outcome widely anticipated as the two had made important concessions over the last month.
Miningmx reports that crucial changes to the combination of the companies include an increase to Glencore’s offer for Xstrata and a restructuring of the offer allowing shareholders to approve the merger without supporting controversial remuneration packages that are intended to retain key Xstrata personnel.
Xstrata CEO Mick Davis will also be employed on his current remuneration and emoluments, rather than adoption of new, higher terms that drew sharp criticism. Davis will be CEO of the combined company for six months, after which he will be replaced by Glencore CEO Ivan Glasenberg.
Notwithstanding the imminent departure of Davis, who was the founding CEO of Xstrata more than 10 years ago, the board structure will contain a majority of Xstrata directors. A current Xstrata operational executive will replace Davis on the board as an executive director.
In addition, Xstrata’s offer will remain a merger rather than a takeover requiring a 74% majority of Xstrata shareholders who can vote. Glencore owns just under 35% of Xstrata.
The scheme of arrangement for the merger sees Glencore offering 3.05 Glencore shares for every Xstrata share, a 17.6% premium over the earlier offer which was rejected by the Qatari sovereign wealth fund, Xstrata’s 12% shareholder.
Further details of the proposed merger will be contained in a merger document that Xstrata and Glencore said would be made available in October. The transaction, which represents one of the largest mergers this year, is expected to be complete by year- end.
“We have decided to decouple the resolutions to approve the merger from the resolution to approve the revised management incentive arrangements,” said Xstrata non-executive chairman Sir John Bond.
“This will, we believe, enable shareholders to vote in line with their convictions in respect of retention arrangements, without influencing their voting intention on the new scheme,” he added.
“Importantly, shareholders who would only support the merger if key Xstrata personnel can be retained are able to approve the new scheme only if retention arrangements are approved by shareholders,” he said.
Commenting on his future role if the merger is approved by shareholders, Davis said: “My objective during my time as CEO of the combined group will be to preserve and enhance the value Xstrata’s management team has created over the past 10 years through a well-planned integration process and to lay down the foundations for the combined group’s success over many decades to come.”
Source: Miningmx. For more information, click here.