By Jesse Riseborough - Sep 10, 2012
Bloomberg
Glencore International Plc (GLEN), which last week raised its bid for Xstrata Plc (XTA) in an effort to win approval for the $36 billion takeover, said the sweetened offer for the Swiss mining company is final.
“The increased merger ratio represents a substantial premium for a company with a 34 percent shareholder,” Glencore, the largest publicly traded commodities supplier, said in a regulatory filing. Today’s statement confirmed the Baar, Switzerland-based company’s Sept. 7 proposal of 3.05 shares, up from a February bid of 2.8 shares, for each one in Xstrata.
Glencore is seeking to shore up shareholder support for its bid after investors including Qatar’s sovereign wealth fund opposed its original offer. Chief Executive Officer Ivan Glasenberg last week reversed a plan to install his counterpart at Xstrata Mick Davis as CEO of the combined group.
“The intention to replace Mick Davis as CEO and to amend the management incentive arrangements carries the risk of seeing key management depart,” Alain William, a Paris-based analyst at Societe Generale SA, said in a note today. “This is not a done deal and we have to recognize the possibility that Xstrata’s board might decide to walk away.”
Xstrata will “consider carefully the proposal received and consult with major shareholders before responding,” it said today in a statement. It plans to announce by 7 a.m. London time on Sept. 24 whether it will put Glencore’s revised plan to its shareholders.
‘Significant Risk’
Davis will be CEO for six months before handing over to Glasenberg under the revised offer, Glencore said today. Davis is ready to step down, provided shareholders get the right price, a person familiar with the situation said of Xstrata, which is based in Zug, just two miles from Glencore’s headquarters in Baar.
The proposal for Glencore’s Glasenberg to be CEO of the combined group “represents significant risk” for retention of Xstrata’s management team and goes against the merger of equals agreement made in February, Xstrata said Sept. 7.
Xstrata gained 3.6 percent that day to close at 1,014 pence in London trading. Glencore dropped 3.6 percent to 378.05 pence. Xstrata stock traded at 2.68 times that of Glencore, up from a ratio of 2.5 the day before.
Under the original deal, Xstrata proposed retention payments totaling 172.8 million pounds ($276 million) for Davis and 72 other executives. Those payments were criticized as excessive by investors including Standard Life Investments.
Retention Bonuses
Glencore said today it is “content” with Xstrata’s request for executives to “receive appropriate retention and incentive packages.” Glencore has asked Xstrata’s board to consider if there are any changes it wishes to propose to these.
The proposal will continue to be structured as a so-called scheme of arrangement which attracts a higher approval threshold of 75 percent. Glencore could switch to a takeover, requiring a lower threshold of more than 50 percent, with the consent of the U.K. takeover panel and Xstrata, Glencore said.
Glencore unexpectedly called off a shareholder meeting on Sept. 7 called to vote on the all-stock offer. Xstrata released a statement the same day saying it had received a proposal from Glencore with a 17.6 percent premium that was “significantly lower than would be expected in a takeover.”
Glencore trades commodities and owns mines, smelters and oil wells. Xstrata mines copper and is the world’s largest exporter of coal burned by power stations. Combining them would create the fourth-biggest mining company.
Bloomberg
Glencore International Plc (GLEN), which last week raised its bid for Xstrata Plc (XTA) in an effort to win approval for the $36 billion takeover, said the sweetened offer for the Swiss mining company is final.
“The increased merger ratio represents a substantial premium for a company with a 34 percent shareholder,” Glencore, the largest publicly traded commodities supplier, said in a regulatory filing. Today’s statement confirmed the Baar, Switzerland-based company’s Sept. 7 proposal of 3.05 shares, up from a February bid of 2.8 shares, for each one in Xstrata.
Glencore is seeking to shore up shareholder support for its bid after investors including Qatar’s sovereign wealth fund opposed its original offer. Chief Executive Officer Ivan Glasenberg last week reversed a plan to install his counterpart at Xstrata Mick Davis as CEO of the combined group.
“The intention to replace Mick Davis as CEO and to amend the management incentive arrangements carries the risk of seeing key management depart,” Alain William, a Paris-based analyst at Societe Generale SA, said in a note today. “This is not a done deal and we have to recognize the possibility that Xstrata’s board might decide to walk away.”
Xstrata will “consider carefully the proposal received and consult with major shareholders before responding,” it said today in a statement. It plans to announce by 7 a.m. London time on Sept. 24 whether it will put Glencore’s revised plan to its shareholders.
‘Significant Risk’
Davis will be CEO for six months before handing over to Glasenberg under the revised offer, Glencore said today. Davis is ready to step down, provided shareholders get the right price, a person familiar with the situation said of Xstrata, which is based in Zug, just two miles from Glencore’s headquarters in Baar.
The proposal for Glencore’s Glasenberg to be CEO of the combined group “represents significant risk” for retention of Xstrata’s management team and goes against the merger of equals agreement made in February, Xstrata said Sept. 7.
Xstrata gained 3.6 percent that day to close at 1,014 pence in London trading. Glencore dropped 3.6 percent to 378.05 pence. Xstrata stock traded at 2.68 times that of Glencore, up from a ratio of 2.5 the day before.
Under the original deal, Xstrata proposed retention payments totaling 172.8 million pounds ($276 million) for Davis and 72 other executives. Those payments were criticized as excessive by investors including Standard Life Investments.
Retention Bonuses
Glencore said today it is “content” with Xstrata’s request for executives to “receive appropriate retention and incentive packages.” Glencore has asked Xstrata’s board to consider if there are any changes it wishes to propose to these.
The proposal will continue to be structured as a so-called scheme of arrangement which attracts a higher approval threshold of 75 percent. Glencore could switch to a takeover, requiring a lower threshold of more than 50 percent, with the consent of the U.K. takeover panel and Xstrata, Glencore said.
Glencore unexpectedly called off a shareholder meeting on Sept. 7 called to vote on the all-stock offer. Xstrata released a statement the same day saying it had received a proposal from Glencore with a 17.6 percent premium that was “significantly lower than would be expected in a takeover.”
Glencore trades commodities and owns mines, smelters and oil wells. Xstrata mines copper and is the world’s largest exporter of coal burned by power stations. Combining them would create the fourth-biggest mining company.
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