Xstrata close to investor deal for its merger

Marion Dakers
XSTRATA hopes to thrash out the final terms of its merger with Glencore this week, using its extension from the Takeover Panel to address concerns from agitated investors.

Some shareholders in the mining giant are unhappy with retention packages for directors at the firm, which have already been watered down.

BlackRock and Legal & General have reportedly spoken out against the plans, though neither would comment yesterday.

However, other shareholders have supported handsome retention benefits for executives, keen to avoid an exodus of top staff once chief executive Mick Davis steps down after six months as planned.

He will be replaced by Glencore’s Ivan Glasenberg at the top of the enlarged firm, after the terms of the merger were amended at the start of the month to fend off an embarrassing protest vote from shareholders.

Executives are also trying to clinch an assurance that Davis’ replacement on the board will be an Xstrata representative.

Glencore and Xstrata asked the Takeover Panel on Friday for an extension until 1 October “to enable Xstrata’s independent non-executive directors to take full account of feedback from consultation with key shareholders”.

Shares in Xstrata closed down 4.2 per cent while Glencore fell 1.7 per cent on Friday in response to the delay.

Both sides are understood to be keen to have an agreement in place this week.

The firms have been in talks about a merger since February but have come up against investor anger over several aspects including the share ratio offered to Xstrata investors and the pay promised to directors.

Qatar Holdings, the 12 per cent shareholder that upset the deal’s progress in June with a demand for better terms, has not yet announced whether it will support the merger in its latest form.

Glencore and Xstrata declined to comment yesterday.