Jack Atley/Bloomberg NewsXstrata’s Mount Isa mine in Queensland, Australia. Glencore adjourned a shareholder meeting on Friday after raising its bid for Xstrata.
LONDON — Glencore International, the world’s largest commodities trader, confirmed its increased all-share offer for the mining giant Xstrata on Monday, which would value the combined company at about $90 billion, but said it would not raise its bid again.
Under the terms of the revised offer, Glencore is now offering 3.05 of its shares for every Xstrata share after shareholders in the mining company balked at Glencore’s initial 2.8 share bid.
The company raised its offer on Friday after several Xstrata shareholders, including the sovereign wealth fund Qatar Holding, said they would vote against the deal if the offer was not increased.
In response to the unrest, Glencore raised its offer, but added in a company statement on Monday that it “will not increase the merger ratio further.”
As part of the new offer, Mick Davis, the chief executive of Xstrata, will become head of the combined company after the deal is completed, but will step down after six months. Mr. Davis will be succeeded by Glencore’s chief executive, Ivan Glasenberg.
Michael Buholzer/ReutersSimon Murray, Glencore’s chairman, left, and Ivan Glasenberg, its chief executive, adjourned a shareholder meeting Friday after Glencore raised its bid for the mining company Xstrata to 3.05 of its shares for every share of Xstrata. The bid had been for 2.8 shares.
Despite the increased offer, some of Xstrata’s shareholders may still hold out for improved terms. Qatar has yet to respond publicly to the newly improved deal, while the the board of Xstrata has said the new price may be too low.
In a move that could placate wary investors, Glencore also confirmed on Monday that the deal would remain a merger.
The company said last week that it wanted the option to restructure the deal as a takeover. The change would have required only 50 percent of Xstrata investors to agree to the deal.
“The new proposal is structured far less aggressively than the straight takeover hinted at on Friday,” Ash Lazenby, an analyst at Liberum Capital in London, said in a research note on Monday. “We expect the revised structuring should get Xstrata board’s recommendation.”
Several hurdles may still block the plan. On Friday, Xstrata warned shareholders about potential problems, highlighting the “significant risk” created if Mr. Davis and his lieutenants did not lead the merged Glencore-Xstrata.
The mining company also said the new ratio offered a premium “significantly lower than would be expected in a takeover.”
On Monday, Xstrata said its board would consider Glencore’s revised bid and decide by Sept. 24 whether to put the offer to its shareholders.
Shares in Xstrata rose 3 percent in morning trading in London on Monday, while stock in Glencore fell about 1 percent.
Article source: http://dealbook.nytimes.com/2012/09/10/glencores-bid-for-xstrata-represents-final-offer/?partner=rss&emc=rss