Xstrata board recommends Glencore merger

LONDON—The board of Anglo-Swiss mining company Xstrata PLC said yesterday it is recommending shareholders accept merger terms with Swiss commodities trader Glencore PLC—a deal that would create an industry behemoth with revenues of around US$175 billion. Xstrata said in a statement it was supporting the offer of 3.05 Glencore shares for each Xstrata share. The deal values Xstrata at £#31.9 billion (US$51.5 billion) on the shares’ closing price Friday. Glencore has a market capitalization of ##£23.5 billion, according to data provider FactSet. Xstrata is the world’s biggest exporter of thermal coal and also produces copper, nickel and zinc. If the deal is approved by 75 per cent of Xstrata shareholders, the merged company would be one of the world’s largest natural resources firms.

 

Glencore, one of the world’s biggest traders in raw materials such as coal, cotton and corn, went public with a US$10 billion IPO last year. Its attempt to get hold of Xstrata has developed into a long-running saga. Previous offers were resisted by Xstrata shareholders, including Qatari sovereign wealth fund Qatar Holding, which holds 12 per cent of Xstrata. Glencore improved its original offer of 2.8 shares last month, leaving issues of management structure and executive remuneration the main stumbling blocks to a merger. The deal announced Monday would see Xstrata chief executive Mick Davis become CEO of the new company for six months, then leave the company to be succeeded by Glencore CEO Ivan Glasenberg. (AP)