Xstrata wants reassurance on management

THE BOARD of Xstrata is looking for reassurance from Glencore that the billed “merger of equals” does not become a takeover after Xstrata chief Mick Davis steps down, according to a source with knowledge of the situation.

Discussions surrounding the merger are currently focused on management succession after Davis departs and the retention of key Xstrata executives, said the source.

The board of Xstrata is this week discussing the revised merger offer made earlier this month, which proposed that Glencore chief Ivan Glasenberg lead the new group after a six month interim period under Xstrata’s Davis.

But Xstrata insiders are concerned about which directors of the Swiss mining company will sit on the board of the new group, so the “merger of equals” does not become a takeover by Glencore.

The mining giant last week asked for an extension of the deadline to 1 October, to thrash out the final details of management composition and remuneration. The merger was first unveiled in February.

Richard Knight, analyst at Liberum Capital, yesterday gave the deal an 80 per cent chance of completion, adding that maintaining a “merger” balance is a “big goal for certain Xstrata shareholders”.

Shares in Xstrata closed 0.5 per cent down yesterday at 999.8p, while Glencore also lost ground, falling 2.17 per cent to close at 354.15p.