Glencore ups the ante as Xstrata deal price raised by £1.9bn

By GARETH MACKIE
Published on 07/09/2012 23:51

COMMODITY trader Glencore has sweetened the terms of its approach for Xstrata, raising the value to around $37 billion (£23.2bn), after the deal looked set to collapse because the mining group’s second-largest shareholder was holding out for a better offer.

Qatar Holding, the government-backed investment fund that owns Harrods, holds around 11 per cent of Xstrata and had been looking for more than Glencore’s previous offer of 2.8 new shares for every Xstrata share held.

Xstrata said yesterday that the commodities giant was now offering 3.05 shares and had proposed that Glencore boss Ivan Glasenberg would become chief executive of the combined group – rather than Xstrata’s Mick Davis as had been originally planned. Glencore would also be able to structure the deal as a takeover offer or as a scheme of arrangement.

The miner said: “This is not a firm offer. Any elements of the proposal remain subject to change and the proposal also remains subject to Xstrata board approval.”

David Cumming, head of equities at Standard Life Investments, said: “We are supportive of the improved terms and the changes to the executive governance arrangements. 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.”

Glencore’s revised offer came after it postponed a shareholder meeting due to take place yesterday to vote on its original $34bn (£21.3m) bid.

Jonathan Jackson, head of equities at Killik & Co, said structuring the deal as a takeover offer would mean only 50 per cent shareholder would be needed to vote the deal through, compared with 75 per cent for a scheme of arrangement, and Glencore may be able to use its 34 per cent stake in the miner.