Xstrata board demands more details on revised Glencore merger offer

Bloomberg

FILE PHOTO: Ivan Glasenberg, chief executive officer of Glencore International Plc, pauses during a conference session on day two of the Saint Petersburg International Economic Forum 2012 (SPIEF) in Saint Petersburg, Russia, on Friday, June 22, 2012. Glencore International Plc raised its offer for mining company Xstrata Plc by 9 percent to overcome opposition from investors, with Glencore Chief Executive Officer Ivan Glasenberg moving to the CEO role in the combined group, reversing a plan for Xstrata�s Mick Davis to hold the position. Photographer: Simon Dawson/Bloomberg *** Local Caption *** Ivan Glasenberg

Mark Leftly London

The board of Swiss mining giant Xstrata wants answers as soon as this week from Glencore on the sweeping changes that the wheat-to-nickel commodities trader has made to their $37 billion (R302bn) megamerger.

The deal, which has been in the offing from almost the moment that Xstrata spun off from Glencore as a collection of coal assets a decade ago, was on the brink of collapse last Thursday night ahead of shareholder votes that were due on Friday.

The merger proposal has frightened activists in the developing world, who fear that price inflation would be a result of the united companies’ dominance in fuel for thermal power stations, zinc, lead and ferrochrome.

Qatar Holding, an arm of the Gulf state’s sovereign wealth fund, has built up a 12 percent stake in Xstrata since the proposal was announced in February. The structure of the voting procedure meant this was enough for the Qataris to carry through threats to derail the deal unless Glencore boss Ivan Glasenberg vastly improved the all-share offer.

Over Thursday night, former British prime minister Tony Blair helped broker a compromise between the two parties. While improving his offer from 2.8 to 3.05 Glencore shares for every one of Xstrata’s, Glasenberg demanded changes in the way the vote was structured and that he would become chief executive.

Under the original offer, Xstrata chief executive Mick Davis was to take on the lead role in the merged group. Xstrata advisers believe that the deal now risks becoming an aggressive takeover rather than a merger, and without more information the board could oppose it.

A source said: “We need more details than a 150-word statement from Glencore, and soon.” – The Independent on Sunday