Glencore and Xstrata deal edges closer to approval

THE £56bn mega-merger between Glencore and Xstrata is edging closer to reality, after shareholders look set to give it the go-ahead.

Qatar Holding, Xstrata’s second-largest shareholder, was last night reported to be on the verge of approving the bid from Glencore, although Qatar itself refused to comment.

The reports came as investment bank Macquarie also said it expected Xstrata shareholders to approve the deal.

Analysts at the bank said that the merged firm would “present investors with an even more compelling opportunity to play the next leg of the commodity cycle”.

Additionally, Macquarie said the merger will strengthen Glencore’s balance sheet, so that by the end of 2014, the merged firm would have $18bn (£11.3bn) of cash to fund future M&A activity.

“Trust in management and patience may be required, but Glencore can drive a multiple re-rating through its merger with Xstrata,” the note concluded.

Xstrata shareholders are due to vote on the deal – which offers 3.05 Glencore shares for each Xstrata share – on 20 November.