Xstrata board expected to back Glencore bid next week

Thu Sep 13, 2012 11:10am EDT
 
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By Clara Ferreira-Marques and Sophie Sassard

LONDON (Reuters) - Xstrata's board is expected to recommend Glencore's revised $34 billion bid as early as next week, sources close to the deal say, although it may come with some qualification surrounding such issues as staff retention.

Glencore, already Xstrata's biggest shareholder with a 34 percent stake, made its original recommended all-share offer in February but hit trouble in June when the company's second-biggest investor Qatar Holding demanded an improved deal.

Detailing the new offer on Monday, Glencore said Xstrata shareholders would now get 3.05 shares for every Xstrata share held, instead of the previous offer of 2.8 shares. However, under the new proposal its own chief executive, Ivan Glasenberg, is to take over the helm of the combined business from Xstrata's chief executive Mick Davis, who would have stayed for at least three years under the original deal.

Instead, Davis, who has led Xstrata for over a decade, will leave within six months.

"We all agree that 3.05 is better, and that if you were happy with 2.8, you should be happy with 3.05," one source involved in the deal said.

"But it is all work in progress. There are a lot of people saying this is a slam dunk, but the board has a duty ... to ensure they are comfortable they have the right construct (and can) retain key operational personnel."

It was not clear what changes the Xstrata board could request or demand, but one of the sources said the board could seek guarantees from Glencore for managers it sees as key: "It will take more than just reassurance."

A separate source said any changes were likely to come in Xstrata's controversial retention package for more than 70 key executives, though others said that was not likely to change.   Continued...

 
The logo of Glencore is seen in front of the company's headquarters in the Swiss town of Baar September 7, 2012. REUTERS/Michael Buholzer