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Last night was probably one of the busiest phone call moments for those people involved in the mega-merger to form another global mining powerhouse as both Glencore (LSE:GLEN) and Xstrata (LSE:XTA) called to adjourn their meetings today following a revision of the merger terms to appease Xstrata’s dissatistfied investor, Qatar Holdings.
The lakeside view from Zug, Switzerland, home to Xstrata’s headquarters, bore witness to the revision of Glencore’s offer of 2.8 of its shares for every Xstrata share to 3.05 shares in the hope of a compromise with Qatar’s sovereign wealth fund, which surprised the market back in June when it threatened to vote against the merger, should its demand not met – 3.25 Glencore shares for every Xstrata share.
Qatar Holdings owns 11.64% of Xstrata, enough for Glencore, which itself owns 33.65% of the mining firm, to yield and place new terms on the table. Only 16.5% of Xstrata’s shareholdings could put the deal to an end should the said magic number doesn’t agree to the terms.
The new deal gained favour from Standard Life Investments, which openly criticised the original terms when it was announced back in February 2012, along with Schroders and Fidelity, owning 3% of Xstrata in aggregate.
Head of Equities at Standard, David Cummings said the firm supports the improved terms as well as the changes in the management arrangements for the anticipated fourth largest diversified mining group in the world.
No official statement was issued by Qatar Holdings in reaction to the announcement made by Xstrata, released after 10:00 AM GMT but Reuters new agency reported the deal-changer was supportive of the deal, citing unnamed sources.
In a statement not officially consented by Glencore, Xstrata revealed the new ratio, which may have resulted in Glencore’s Chief Executive, Ivan Glasenberg, to become the new firm’s CEO following the merger, in place of Mick Davis, Xstrata’s current Chief Executive.
Shares of Xstrata jumped as high as 1,081 pence at 10:20 AM, minutes after the announcement was made and was now at 1,039 pence, or 6.1% higher than yesterday’s close by 3:00 PM at a turnover of more than 35 million shares.
Over 68 million shares of Glencore shares were traded, pulling the price down 5.3% to 371.35 pence, giving a ratio of almost 2.8. Glencore temporarily suspended trading earlier after it announced an adjournment of the meeting for the approval of the merger.
