It News: Glencore Raises Offer for Xstrata in Surprise Move

September 7, 2012

Glencore Raises Offer for Xstrata in Surprise Move

Published: Friday, 7 Sep 2012
By: CNBC.com with Reuters

Glencore did an about-turn on Friday, raising its offer for miner Xstrata to 3.05 Glencore shares for every Xstrata share, from 2.8 earlier.
The move followed high drama on Friday when Glencore [GLEN-LN 373.90 -18.45 (-4.7%) ] suspended a shareholder vote on its $34 billion takeover bid for Xstrata [XTA-LN 1047.50 68.50 (+7%) ].

Shares of Xstrata jumped nearly 9 percent after news of the amended deal crossed the wires.

Under the new deal terms, Glencore's CEO Ivan Glasenberg would become the CEO of the combined company rather than Xstrata CEO, Mick Davis. The deal would also be structured as a takeover, rather than as a merger.

Glasenberg had suggested just last month that Glencore would not raise its offer, telling reporters that the deal wasn't a "must-do" for the company.

Earlier, Glencore Chairman Simon Murray gave no details of the delay in the shareholder meeting, telling attendees in Zug, Switzerland, only that there had been "developments overnight", hinting at an improved deal.

"It has happened very recently, overnight," he said.

Glencore's bid had been teetering on the brink of collapse after Xstrata's second-largest shareholder, Qatar, said it would vote against Glencore's offer of 2.8 shares.
Glencore also asked for its shares to be suspended in London and Hong Kong on Friday morning.

Glencore investors were due to have met at 9 a.m. (0700 GMT), with Xstrata's meeting following a couple of hours later, also in Zug, Xstrata's home base.

Under the deal's structure, holders of just 16.5 percent of Xstrata's shares needed to vote against the planned tie-up for the deal to collapse, and Qatar, with 12 percent, said last week it would vote against the Glencore proposal - making it virtually impossible the bid would go through without an improvement, or a truce between the two.
Qatar and Glencore had not met since the Gulf state's sovereign wealth fund demanded an improvement in June to the trader's offer and both sides had said they would stick to their positions.

Glencore, with a 34-percent stake, has long coveted a full tie-up with Xstrata to create a mining and trading powerhouse.

It made its move in February, less than a year after a listing largely motivated by the desire to do more ambitious deals.