Qatar backing puts Glencore's Xstrata deal on track

Thu Nov 15, 2012 8:11am EST
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By Sarah Young

LONDON (Reuters) - Commodity trader Glencore's $32 billion takeover of Swiss miner Xstrata looked set to go ahead after winning the backing of Qatar Holdings, the bid target's second-largest shareholder.

Qatar, an unexpected kingmaker in Glencore's bid for Xstrata, said on Thursday it would vote for two key resolutions on the takeover, which is aimed at creating a mining and trading powerhouse.

In a snub to Xstrata management, Qatar said it will abstain from voting on a multimillion-pound management retention plan, which increases the chances of that aspect of the deal being voted down.

"In a nutshell, this means the deal is all but done," Liberum analysts said.

Qatar's support for the deal, first announced in February, came after its surprise opposition to terms in June and brought Glencore within weeks of sealing its long-running pursuit of Xstrata.

Separately, sources told Reuters that Glencore offered to sell Xstrata's German smelter to try to win European Union approval for the takeover, in addition to its existing offer to scrap a key zinc sales deal.

Through a series of votes, Xstrata investors will be able to express their views on the management retention plan without endangering the merger.

Xstrata has said the retention plan was necessary to the success of the merger because it will ensure key managers stay on to oversee the shift into a phase of significant volume growth at the company's mining projects.   Continued...

Combination of file photos showing the logo of Glencore in front of the company's headquarters in the Swiss town of Baar (R) September 7, 2012, and the logo of Swiss mining company Xstrata at their headquaters in Zug March 26, 2008. REUTERS/Michael Buholzer/Files