Tension for Xstrata board as Glencore deal nears finish line

Sun Nov 18, 2012 11:36am EST
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LONDON (Reuters) - Commodities trader Glencore (GLEN.L: Quote) is set to all but clinch its $30 billion takeover of Xstrata this week, despite a potential snub for the miner's board if, as expected, investors scrap a controversial pay plan for its managers.

Shareholders in both Glencore and Xstrata XTA.L, the world's fourth-largest diversified miner, will vote in Switzerland on Tuesday.

European competition regulators will decide by Thursday whether to give the green light to one of the sector's biggest ever acquisitions, or begin a longer probe.

After nine months of unexpected twists and wrangling between Xstrata and its top shareholders - not to mention years of on-off talks between the miner and trader - the deal is moving towards the finish line, a victory for Glencore's boss, top shareholder and the deal's chief cheerleader, Ivan Glasenberg.

The deal's prospects were boosted last week thanks to support offered by Xstrata's second-largest investor, Qatar, overcoming initial reticence over the terms of the deal.

Glencore, Xstrata's top shareholder, has separately offered up antitrust concessions, in the hope of securing an EU nod.

"There are hurdles, but they are not insurmountable. I would be very surprised if the deal didn't go through," analyst Chris La Femina at Jefferies said.

Shares in the two groups closed on Friday at a ratio of 2.95 - narrowing in on the ratio of 3.05 shares for every Xstrata share held being offered by Glencore in the all-share deal.

However, a decision by Qatar to abstain from voting on Xstrata's 140 million pound ($222 million) "golden handcuffs" plan to tie in key management has increased the chances that the proposal - which has ruffled investor feathers - will fail.   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