Glencore fights to save $26 billion Xstrata bid

Wed Jun 27, 2012 6:27pm EDT
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By Kate Holton and Sinead Cruise

LONDON (Reuters) - Commodities trader Glencore (GLEN.L: Quote) fought to save its $26 billion bid for miner Xstrata XTA.L on Wednesday after shareholder Qatar stunned the pair with a late demand for better terms, forcing them to push back the timing of the deal.

The Qatari intervention pushed the deal to the brink as it prompted a string of major shareholders to revisit their own concerns, such as soaring executive pay and fears that the combined entity would take on riskier business.

Qatar had remained silent for months as it built the second-largest stake in Xstrata, before calling late on Tuesday for 3.25 new Glencore shares for every Xstrata share, up from the 2.8 on offer.

"Three cheers for the Qataris," Richard Buxton, head of UK equities at Schroders, told Reuters. "We've said all along that the ratio was wrong so they've either now got to improve the terms or see this deal get voted down."

Glencore would have had to make any changes to the deal terms by Thursday evening if its shareholders were to approve the takeover in mid-July as originally planned.

Glencore said it would adjourn its shareholders' meeting which had been due on July 11 and Xstrata said it would convene a new meeting when it had updated the executive pay deals which had been another major bone of contention.

The 11th-hour call from the Qatar Investment Authority (QIA) emboldened other investors angered by the hefty packages offered to retain top executives at Xstrata, including an extra 29 million pounds over three years just to keep CEO Mick Davis.

In an attempt to appease investors, Xstrata said the awards would now be paid in shares and would only fully vest if an additional $300 million of cost savings were achieved in two years.   Continued...

Swiss commodities trader Glencore's logo is seen in front of its headquarters in Baar, near Zurich in this February 6, 2012 file photo. Qatar, Xstrata's second largest shareholder, threw a huge roadblock in the way of Glencore's $30 billion takeover of the miner with a surprise demand on June 26, 2012 for better terms. REUTERS/Romina Amato/Files