Xstrata approves merger with Glencore, Chairman to step down

Following a rather byzantine string of votes this afternoon Xstrata shareholders have approved their company's merger with Glencore International, in a combination which will see the creation of the world's fourth largest mining company and third largest producer of mined copper.

Thus, the company's shareholders were asked to vote on three different motions.

The reason for that atypical voting structure was to avoid any risk -or possible future allegations- that Xstrata board members might be accused of not having been completely impartial when deciding on recommending the transaction to their shareholders.

In the end, Xstrata shareholders approved going through with the proposed merger of equals with Glencore by a majority 78.88% of cast ballots.

The proposed scheme of retention bonuses, however, was struck down, with 78.43% of those qualified to vote going against it.

While retention bonuses are common practice in such operations Xstrata's board seems to have fallen afoul of some of its own shareholders.

As a direct and immediate result of the above, Xstrata's Chairman, Sir John Bond, has announced that following the successful completion of the merger he will step down.

Touching on that same point, Glencore's own Chief Executive, Mick Davis, has indicated that; "Glencore Xstrata has the potential to become a very significant company in the resources world and Xstrata's people will be a critical element of this success.

"I regret the decision of shareholders not to approve these retention arrangements for the members of my senior and operational management deemed crucial to the success of the combined group as, in my view, this introduces unnecessary risks to the merged company's future value proposition."

The company has yet to obtain regulatory clearance from the European Union - which is expected in the next few days- and the People's Republic of China.

Shares of Xstrata finished the day higher by 3.11%, at 986.9p, while those of Glencore were up by 1.6% at 331.75p.

AB