Glencore and Xstrata announce merger agreement
01-Oct-2012 La Tercera – News
In accordance with the term both parties had agreed to expire this morning, both mining companies confirmed Xstrata acceptance to the Glencore´s offer to pay 3.05 Glencore shares per each share of Xstrata
Glencore and Xstrata announced today they have reached an agreement on final merger terms which – after a US$37,000 million worth operation -will become the fourth largest mining company in the world
In accordance with the term both parties had agreed to expire this morning, both mining companies confirmed Xstrata has accepted Glencore’s offer to pay 3.05 Glencore shares per each share of Xstrata.
The initial offer of 2.8 worth shares was ruled out after being considered insufficient by several shareholders and very explicitly by the second most important share owner, the Sovereign Wealth Fund of Qatar.
Glencore is currently largest Xstrata shareholder with 34% participation.
The value the British Glencore is willing to pay for the Swiss-origin Xstrata includes a 17.6% bonus with respect to early February when their interest to join efforts was initially expressed.
This bonus corresponds to 25.5% of the mean of the three days (3 – 6 Sept) before the announcement of Glencore stating they were in good disposition to improve their offer terms.
Managing structure will remain unchanged with the only exception of Mick Davis who is currently Xstrata Delegate Advisor and will be assigned as Director of the merged group for a six-month period.
Once this period is elapsed, Ivan Glasenberg, who is currently performing as Glencore Delegate, will be assigned to the new company.
As for legal situation, both companies have stated that the agreement scheme must be approved by a jurisdictional resolution in order to guarantee a significant majority of Xstrata shareholders accepts the merge.
The company that will come out from this merge will have a 70,000 million dollar capitalization as per current market prices.
Both companies hold stakes all around the world and a large number of operations in Latin America, they have their legal address at Zoug in Swiss and are listed on the London Stock Exchange Market.
Xstrata shares experienced a 1.5% rise today in the London Stock Exchange Market after announcing they have recommended their stockholders to accept the agreement to merge with Glencore.
