May 28, 2023

DealBook: Glencore Offers Concessions to Win Support for Xstrata Deal

LONDON – The commodities trader Glencore International has offered concessions to European antitrust authorities in a bid to win support for its $33 billion proposed takeover of the mining company Xstrata.

In response, the European Union pushed back its deadline to rule on the deal by two weeks, to Nov. 22. The transaction would create one of the world’s largest diversified mining and trading companies.

The announcements come as Glencore and Xstrata continue to seek shareholder approval after many investors balked at the initial offer of 2.8 shares in Glencore for every share in Xstrata.

Glencore raised its offer last month to 3.05 shares for each Xstrata share, though it said that as part of the revised deal, Glencore’s chief executive, Ivan Glasenberg, should take over as head of the combined group earlier than had been planned.

Xstrata’s shareholders, including the sovereign wealth fund Qatar Holding, will meet on Nov. 20 to decide whether to approve deal. To reach a deal, 75 percent of Xstrata’s eligible shareholders must support it. Glencore, which owns 34 percent of Xstrata, will not be permitted to vote.

Neither Glencore nor the European Union gave details on the concessions that were offered to win antitrust backing. Potential disposals may include parts of its zinc metal operations, according to Reuters.

The proposed acquisition has been hampered by several shareholder revolts.

Part of the anger has focused on bonuses that Glencore and Xstrata had been negotiating to retain top executives. The payouts could be worth more than $200 million.

Some institutional investors, including BlackRock and Legal and General, have opposed the payments because they are viewed as extravagant. The opposition prompted Xstrata to revise the bonus packages to link them more closely to performance targets, though the overall cost is similar.

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