Xstrata plc said on Monday that it notes the announcement by Glencore International plc of its full and final offer for Xstrata.
The independent non-executive directors will consider carefully the proposal and consult with major shareholders before responding‚ it said.
Xstrata’s independent non-executive directors confirm that they will‚ by not later than 7.00am (London time) on Monday 24 September‚ announce whether or not they intend to put Glencore’s proposal to shareholders and if so‚ will publish their response on all elements of the Glencore proposal.
At the weekend Glencore made a proposal representing an increased merger ratio of 3.05 new Glencore Shares for each Xstrata share‚ excluding the Xstrata shares already held by the Glencore group.
Glencore confirmed that it was an all-share merger and it would not increase the merger ratio further.
The increased merger ratio represents a substantial premium for a company with a 34% interest at the close of business on Wednesday‚ September 5 - the last business day prior to any speculation of a change to the terms of the merger - Glencore and Xstrata were trading at an exchange ratio of 2.4x. That would imply a premium of more than 27% would be paid with the new proposed merger ratio.
In order to provide clarity on the issue of CEO succession‚ Mick Davis will become the CEO and executive director of the combined group on the merger becoming effective‚ but will step down within six months with Ivan Glasenberg becoming CEO of the combined group at that time.
The merger remains conditional on independent Xstrata shareholders approving appropriate management incentive arrangements for Xstrata management and senior employees.
Glencore has confirmed that it is content with Xstrata’s request for Xstrata management and senior employees to receive appropriate retention and incentive packages.
Glencore has asked the independent Xstrata board to consider what‚ if any‚ changes they would propose to the retention and incentive arrangement packages set out in Xstrata’s supplementary scheme circular dated August 8 2012‚ to ensure that they are acceptable to independent Xstrata shareholders.
In February Glencore and Xstrata agreed on the terms of a recommended all-share merger of equals‚ which would lead to a major resources group with a combined equity market value of US$90 billion and a unique business model‚ fully integrated along the commodities value chain‚ from mining and processing‚ storage‚ freight and logistics‚ to marketing and sales. - I-Net Bridge