Judgement day for mega-merger of Glencore and Xstrata
GLENCORE’S proposed $34bn (£21.3bn) merger with Xstrata appeared to be heading for failure last night as investors lined up this morning to vote on the deal.
Barring a last minute hike in the offer price from Glencore, leading Xtstrata shareholder Qatar Holding is expected to scupper the deal.
Glencore, which owns 33.7 per cent of Xstrata, will hold a shareholder vote on the proposal at 8am this morning with Xstrata planning to follow suit at 10am.
Qatar Holding, which owns 11.6 per cent of Xstrata, has steadfastly refused to support the plan because it wants a better deal.
The investor, the investment arm of Qatar’s sovereign wealth fund, has called for Glencore to offer 3.25 new Glencore shares for each Xstrata share to shareholders. Glencore’s last offer was 2.8 new shares.
“In M&A, one should never rule out a last-minute twist, but I am quite sceptical it will happen,” said one source involved in the deal.
If Glencore raised its offer, it is understood Xstrata’s shareholder meeting would be cancelled to give shareholders more time to mull the new offer. It is understood plans were still in place to hold both meetings late last night.
However, there is still scope for Glencore to keep the deal alive and increase its offer at the last minute.
Glencore’s chief executive Ivan Glasenberg is a major shareholder in Glencore with 16 per cent – meaning a last minute change of heart from Glasenberg could salvage the merger.
“You can’t rule out last-minute phone calls. And you are only dealing with an individual – it is just Ivan,” a source said. “In theory, they could get something done and delay the vote.”