LONDON/DUBAI (Reuters) - Glencore hammered out a revised $36 billion bid for miner Xstrata in intense weekend negotiations and is set to detail its new offer to the market as early as Monday, days after proposing 11th-hour changes to save the deal.
Sources familiar with the deal said commodities trader Glencore, keen to clarify its own position but also under pressure from Xstrata and UK regulators, would publish details of the higher offer imminently. Two sources said the new, firm, offer - with some concessions to win over recalcitrant Xstrata shareholders - was expected on Monday.
The firm offer will be studied by Xstrata's board and non-executive directors, who on Friday questioned Glencore's new proposal and said they required more details in order to decide on whether or not to recommend it. The Xstrata board will also discuss the proposal with top independent shareholders, one other source familiar with the deal said.
Glencore, the world's largest diversified commodities trader and Xstrata's largest shareholder with a stake of 34 percent, made a long-awaited takeover bid for the miner in February. But the offer ran into trouble in recent months and was expected to fail as shareholders prepared to vote on Friday, after number two shareholder Qatar and other investors opposed the terms of the deal, while Glencore refused to yield.
Living up to Chief Executive Ivan Glasenberg's reputation as an unpredictable negotiator, however, a higher proposal from Glencore was announced just minutes before the miner's shareholders met to cast their ballots on the existing offer.
Friday's fresh proposal, disclosed to the market by Xstrata, included an increase in the offer to 3.05 new shares for every Xstrata share held, up from 2.8. Conditions, however, also include the appointment of Glasenberg as chief executive of the combined group, at the expense of Xstrata boss Mick Davis.
Davis, who has shares in Xstrata worth some 25 million pounds ($40 million), will miss out on a bumper three-year retention package worth almost 30 million pounds if the deal spells the end of his decade-long stint at Xstrata. But he could still be in line for a termination payment of at least 8 million pounds, sources familiar with the deal said.
Monday's announcement, however, will attempt to allay the concerns of some Xstrata shareholders fretting over the company's operations by retaining mining veteran Davis for an interim period and holding on to Xstrata chairman John Bond, as chairman of the merged group, one of the sources said.
A former chairman of Vodafone and HSBC, Bond is considered a steadier hand than Glencore chairman Simon Murray, but has also been criticized by some minority shareholders for recommending the initial Glencore offer.
Glencore's proposal on Friday had allowed for the deal to be structured as a straightforward takeover, instead of the previous mechanism, which required approval from 75 percent of shareholders excluding Glencore - meaning investors representing just 16.5 percent of the total could block it. That had allowed Qatar's sovereign wealth fund, with 12 percent, to act as kingmaker.
In another effort to appease shareholders, Monday's announcement is expected to retain the 75 percent threshold, unless a change is approved by Xstrata's board, the source said.
Both Glencore and Xstrata declined to comment on Sunday.
Glencore broke a months-long impasse with Qatar's sovereign wealth fund in the early hours of Friday, after a night of last-ditch talks in London between Glasenberg, Qatari prime minister Sheikh Hamad bin Jassim al-Thani and advisers.
Qatar had in June demanded an offer of at least 3.25 new shares for every Xstrata share held, but in recent weeks had been said to have softened that stance.
Qatar, which sources familiar with the matter have said still opposes elements of the new proposal, is expected to study the final details on Monday before making its position public.
Other big shareholders are divided on the proposal, with many choosing to wait for the firm offer to form a view. Activist fund Knight Vinke, however, said on Sunday it rejected the proposed bid and called on Glencore to "pay an appropriate premium" for the change of control.
Thursday's late-night talks were held after a rapprochement facilitated by former British Prime Minister Tony Blair, brought in by Michael Klein, a former Citigroup banker acting for both Glasenberg and Davis, one source said.
The Sunday Times newspaper said Blair had made $1 million in fees for his efforts at the meetings in London's Claridges hotel, but sources familiar with the talks told Reuters his involvement was not central and fees would be lower.
Reporting by Clara Ferreira-Marques; Editing by Peter Graff and Diane Craft