This is story about Xstrata shares bid by Glencore. It is reported that Glencore, which already owns just over a third of Xstrata, confirmed its bid was now at 3.05 new shares for every Xstrata share held. That level represents a 27 percent premium to the ratio at which Glencore and Xstrata were trading last week, when the market believed the deal would collapse. Under the terms of the revised offer, Glencore is now offering 3.05 of its shares for every Xstrata share after shareholders in the mining company balked at Glencore’s initial 2.8 share bid.
Glencore’s chief executive and top shareholder Ivan Glasenberg still demands the top job in the combined entity, but the deal now retains a merger structure unless a change is approved by Xstrata – rather than shifting to a straightforward takeover requiring a simple majority to approve the bid.
Shares in Xstrata were up 2.4 percent at 1,038.5 pence at 0720 EDT, outperforming a 1.8 percent rise in the UK mining sector, while Glencore was down 1.2 percent. Several sources had said Qatar was surprised by some of Glencore’s provisions in Friday’s proposal, including the departure of Xstrata Chief Executive Mick Davis, who has been implicitly backed by Qatar so far.
One of Xstrata’s 40 largest investors added: “The deal looks much more likely to happen now. I’d be surprised if the independent Xstrata directors say no.”
In line with proposals on Friday, Glencore’s Glasenberg would take the top job at the expense of Xstrata boss Davis, a mining industry veteran who would have taken the chief executive role under the original offer. Glencore made a long-awaited takeover bid for Xstrata in February.
In other news, Xstrata Plc (XTA) rose in London trading as investors bet a 9 percent increase in Glencore International Plc (GLEN)’s all-share offer for the Swiss mining company boosts the chances this year’s biggest takeover will be completed.
It is said that Xstrata was 1.7 percent higher at 1,031.5 pence at 1:40 p.m. London time. Glencore, the world’s largest publicly-traded commodities supplier, declined 1.2 percent to 373.5 pence. Xstrata stock traded at 2.77 times that of Baar, Switzerland- based Glencore, up 3.2 percent from a ratio of 2.68 on Sept. 7.
Along with the sweetened terms, Glencore said today its revised takeover plan would see Xstrata CEO Mick Davis departing within six months. The proposal for Glencore’s Glasenberg to be CEO of the combined group “represents significant risk” for retention of Xstrata’s management team and goes against the merger of equals agreement made in February, Xstrata said Sept. 7. Under the original deal, Xstrata proposed retention payments totaling 172.8 million pounds ($276 million) for Davis and 72 other executives.
Glencore unexpectedly called off a shareholder meeting on Sept. 7 arranged to vote on the all-stock offer. “We expect the revised structuring should get Xstrata board’s recommendation.”
The Glencore company raised its offer on Friday after several Xstrata shareholders, including the sovereign wealth fund Qatar Holding, said they would vote against the deal if the offer was not increased.
Despite the increased offer, some of Xstrata’s shareholders may still hold out for improved terms. “We expect the revised structuring should get Xstrata board’s recommendation.”
Shares in Xstrata rose 3 percent in morning trading in London on Monday, while stock in Glencore fell about 1 percent.