Xstrata Board Supports Glencore’s Revised Offer

[littlemissmartypants]

Source: Reuters

The board of the mining giant Xstrata on Monday backed a revised takeover bid from the commodities trader Glencore International, keeping what would be one of the biggest mergers in years on track.

Xstrata’s board made the announcement just before a regulatory deadline — already extended once — was scheduled to expire.

The decision of Xstrata’s directors to proceed with their recommendation keeps afloat a merger that would create a behemoth in the world of mining and minerals. But questions about the company’s restive shareholders have weighed down talks between the two sides.

Read more: http://dealbook.nytimes.com/2012/09/30/xstrata-board-said-to-support-glencores-revised-offer/?src=twrhp

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Xstrata is one of the world’s largest global diversified mining businesses.

[littlemissmartypants]

1. At this blog you can read commentary on why

Xstrata should accept revised Glencore pitch, By Kevin Allison SEPTEMBER 10, 2012

Xstrata should accept Glencore’s revised $35.5 billion offer for the mining giant. What was originally billed as a merger of equals is now, for all practical purposes, a takeover at a modest premium. Changes to the proposed governance arrangements make the business combination look riskier than before. Glencore may have to pay up to convince Xstrata’s top people to take orders from its boss, Ivan Glasenberg, after his Xstrata counterpart Mick Davis leaves. But for all the recent animosity, this is a recommendable proposal.

Glencore’s final offer represents a 17-percent premium to the pre-deal status quo in February. That’s almost double the premium offered in the originally agreed merger. It may be short of the 30 to 40 percent typically expected in takeovers, but that reflects Glencore having partial control already via its existing 34-percent stake

... one rationale for the deal was to acquire Xstrata’s mining talent. Glencore has acknowledged as much, saying it will consult with Xstrata’s independent directors and shareholders on new incentives to prevent talent flight. It should be a solvable problem, at the right price. But it will take some delicate maneuvering given the blow up over Davis’s original retention bonus.

Xstrata may have to swallow its pride at the weakish premium. But a rival suitor is unlikely: Glencore’s blocking stake prevented Brazil’s Vale buying Xstrata in 2008. And the premium gains a few more percentage points when judged against Xstrata’s market value last week when investors were pricing in a high probability of deal failure. What’s more, Breakingviews’ calculations show Xstrata shareholders are already getting the full value of the synergies.

http://blogs.reuters.com/breakingviews/2012/09/10/xstrata-should-accept-revised-glencore-pitch/