Glencore raises its offer for Xstrata

AP News
Posted: Sep 07, 2012 8:40 AM
Glencore raises its offer for Xstrata

GENEVA (AP) — Commodities trader Glencore International PLC said Friday it is prepared to raise its offer to salvage a proposed $80 billion merger with mining company Xstrata PLC.

The announcement followed an intervention by former British leader Tony Blair, according to the Financial Times. The newspaper reported that the new offer was worked out at a meeting in London between Glencore CEO Ivan Glasenberg and Qatari Prime Minister Hamad bin Jassim al-Thani. The meeting was reportedly arranged by Blair.

Glencore has struggled to net Xstrata because its previous offer was resisted by Qatar Holding, a major Xstrata shareholder.

Xstrata announced Friday that it had received a proposal from Glencore to offer 3.05 new shares for each Xstrata share, up from the existing offer of 2.8 shares. Qatar Holding had previously indicated it wanted 3.2 Glencore shares for each Xstrata share.

Xstrata shares were up 7.7 percent at 1,054 pence in midday trading in London. Glencore shares were down 4.3 percent at 375.5 pence.

There was no comment from the Qataris and Blair's office could not be reached for comment.

Glencore also proposed that its chief executive, Ivan Glasenberg, would become CEO of the combined companies. The earlier plan was for Xstrata CEO Mick Davis to take that role in the combined company.

Glencore also proposed that it have the option of structuring the deal as a takeover rather than a scheme of arrangement, the original plan which required the approval of 75 percent of eligible shareholders. A takeover requires a simple majority.

Glencore and Xstrata adjourned shareholder meetings which had been scheduled for Friday to approve the deal.

Standard Life Investments, which had also pressed for a better price for its Xstrata shares, welcomed the new offer.

"The deal will, we believe, enhance the growth prospects of the combined group and consequently, as shareholders both of Xstrata and Glencore, we are pleased with the proposed outcome," said David Cumming, Standard Life's head of equities.

Glencore, the world's largest publicly traded supplier of raw materials such as oil, copper and wheat, had said earlier that it would rather walk away from its proposed merger than overpay.