Glencore set to win EU approval on Xstrata deal

THE £56bn mega-merger between commodity giants Glencore and Xstrata looks set to clear another hurdle today, as EU antitrust regulators are expected to approve the deal.

Glencore is understood to have improved its offer to secure an approval from European Commission antitrust regulators, which is set to be officially announced today.

The commodity trading powerhouse has agreed to terminate its sales deal with global zinc producer Nyrstar, it is thought, which is expected to be enough to satisfy EU competition chiefs and avoid a lengthier “phase two” investigation that could delay completion of the deal by up to six months.

It is understood Glencore avoided more substantial concessions, which could have included the sale of assets like Xstrata’s Nordenham zinc plant in Germany – which produced 148,000 tonnes of zinc last year – or, as some analysts had feared, the miner’s San Juan de Nieva refinery, the largest of its kind in the world.

After 10 fraught months of negotiations, commodity powerhouses Glencore and Xstrata finally brought their tie-up to fruition earlier this week, as Xstrata investors backed the deal. It paves the way for the largest M&A deal this year.

However, controversial management incentive arrangements for around 70 Xstrata executives and managers were rejected, which claimed the scalp of incumbent Xstrata chairman Sir John Bond who announced he was to stand down from his role.

Following regulatory clearance from Europe, Glencore still needs approval from China’s Ministry of Commerce and a final approval from competition authorities in South Africa before the deal is officially green-lit.

Depending on the combined group’s final weighting, the new Glencore Xstrata could be the 13th largest company on the FTSE 100, which would represent more than two per cent of the blue chip index.

Glencore declined to comment yesterday.

The commodities trading giant closed up 0.71 per cent at 334.1p yesterday, while Xstrata closed up 1.05 per cent at 997p.