Glencore raises offer for Xstrata to salvage deal

Fri Sep 7, 2012 3:06pm EDT
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By Clara Ferreira-Marques and Emma Farge

LONDON/ZUG, Switzerland (Reuters) - Trader Glencore has raised its offer for miner Xstrata in a last-ditch attempt to rescue one of the sector's largest ever deals, after months of opposition from Qatar's sovereign wealth fund and other shareholders.

After early excitement in the market on Friday, however, it remained unclear whether the revised proposal would succeed.

Xstrata's independent directors issued a strongly worded statement questioning its structure, and sources familiar with the matter said Qatar could oppose major elements of what is still only an indicative deal.

Glencore's Chief Executive Ivan Glasenberg appeared to have broken an impasse between Xstrata's two biggest investors - who had not talked to each other for two months - after overnight talks in London.

The meeting, attended by Glasenberg, Qatari prime minister Sheikh Hamad bin Jassim al-Thani and former British prime minister Tony Blair - who has had a role in facilitating the deal - put the takeover now worth $36 billion back on the table.

Xstrata shareholders had been due to vote on the original $34 billion bid on Friday, with a rejection widely expected. But Glencore, already Xstrata's biggest shareholder with a 34 percent stake, then proposed the revised offer of 3.05 new shares for every share it does not already own, up from 2.8.

Qatar, Xstrata's second largest shareholder, had demanded a ratio of 3.25 in June, though in recent days sources involved in the deal had said the Gulf state could compromise.

"Ivan showed what everyone suspected - he needs this deal more than anyone else," said one source familiar with the deal.   Continued...

The logo of Glencore is seen in front of the company's headquarters in the Swiss town of Zug May 9, 2012. REUTERS/Arnd Wiegmann