Glencore raises Xstrata takeover offer by 9%

Sat, Sep 8, 2012, 01:00

GLENCORE HAS raised its offer for mining company Xstrata by 9 per cent in a bid to salvage the $36 billion (€28 billion) takeover and overcome opposition from investors including Qatar’s sovereign wealth fund.

The revised offer is for 3.05 Glencore shares for each Xstrata share, a 17.6 per cent premium.

The commodities trader, owner of 34 per cent of Xstrata, has proposed an increase in its February all-stock offer to 3.05 of its shares from 2.8 for each one in its target, said Xstrata.

Glencore chief executive Ivan Glasenberg would be chief executive in the combined group, reversing a plan for Xstrata’s Mick Davis to hold the post. Qatar Holding LLC and Knight Vinke Asset Management LLC had sought a higher price for their Xstrata shares and said they would vote against the takeover.

Glencore is seeking to complete a five-year plan to create the fourth-largest mining company.

“Given the late-minute drama, I suspect it has the Qataris over the line and I think the other shareholders would probably go for this as well,” said Peter Davey, head of metals and mining research at Standard Bank Group, London.

A Qatar Holding spokesman declined to comment.

Xstrata, based in Zug, Switzerland, gained as much as 11 per cent to 1,091.5p, the biggest intraday gain since takeover talks between the companies became public in February.

Xstrata was 4.3 per cent higher at 1,021.5p at after falling 6 per cent before news of the revised offer, which Xstrata said must still be put to its board.

Glencore dropped 3.8 per cent to 377.3p after earlier falling as much as 7 per cent. Xstrata stock traded at 2.71 times that of Glencore, up from a ratio of 2.5 on Thursday. The offer values the Xstrata shares Glencore does not own at $35 billion.

Glencore’s proposal includes the option of changing the offer to a takeover from a so-called scheme of arrangement.

That would reduce the level of acceptances needed to complete a deal to more than 50 per cent, compared with 75 per cent using a scheme of arrangement. The company would decide whether to reconvene shareholder meetings once it got a “detailed proposal”, said Xstrata. – (Bloomberg)