Glencore delays Xstrata bid vote, hints at deal
London, September 7, 2012
Glencore's $34 billion takeover bid for miner Xstrata appeared to be back on after the commodities trader postponed a shareholder meeting on Friday that had been expected to vote on the faltering deal.
Glencore Chairman Simon Murray gave no details, telling shareholders in Zug, Switzerland, only that there had been "developments overnight", hinting at an improved deal.
"It has happened very recently, overnight," he said.
Glencore's bid had been teetering on the brink of collapse after Xstrata's second-largest shareholder, Qatar, said it would vote against Glencore's offer of 2.8 new shares for every Xstrata share held.
"If Glencore's adjourning the meeting then it looks like they probably will be raising the exchange ratio," said an analyst who declined to be named.
Xstrata shares were up 3.4 percent at 1,012 pence at 0748 GMT, while Glencore's were down 1.5 percent at 386.5p, indicating that the market thinks so, too.
One of Xstrata's largest 40 shareholders expressed surprise at the last-minute adjournment and was hopeful of a bump-up in terms.
"The deal as was wasn't going to happen, so maybe (Chief Executive Ivan Glasenberg) has come in with an eleventh-hour revision. Compromise of exchange ratio of 3?"
Glencore said in a statement it was "considering its options" and would update the market in due course. In the meantime it has asked for its shares to be suspended in London and Hong Kong.
"I have sympathy with Glencore's request for a trading suspension. The prices are trading in an information vacuum at the moment," the top 40 shareholder said.
Glencore investors were due to have met at 9 a.m. (0700 GMT), with Xstrata's meeting following a couple of hours later, also in Zug, Xstrata's home base.
If Glencore changed the terms of its offer at the last minute, both companies would have to delay the shareholder votes to meet regulatory requirements, probably by at least two weeks.
Under the deal's structure, holders of just 16.5 percent of Xstrata's shares needed to vote against the planned tie-up for the deal to collapse, and Qatar, with 12 percent, said last week it would vote against the Glencore proposal - making it virtually impossible the bid would go through without an improvement, or a truce between the two.
Qatar and Glencore had not met since the Gulf state's sovereign wealth fund demanded an improvement in June to the trader's offer and both sides had said they would stick to their positions.
Glencore, with a 34-percent stake, has long coveted a full tie-up with Xstrata to create a mining and trading powerhouse. It made its move in February, less than a year after a listing largely motivated by the desire to do more ambitious deals.
Qatar and Xstrata spokespeople declined to comment. – Reuters