Eleventh hour Glenstrata deal in the works

published 7 September 2012

A last-minute deal to save the controversial merger of Xstrata with its major shareholder Glencore is on the cards after Glencore adjourned its extraordinary general meeting (EGM) called to vote on the merger.

Simon Murray, Chairman of Glencore, said there had been developments overnight and there is speculation that a revision to the terms could be announced on Friday morning. They will have to get a crack on, however, as Glencore has until 11:00 Swiss time (10:00 BST) to persuade Xstrata to adjourn its own EGM, which has been called to vote on the so-called "merger of equals" with Glencore.

Xstrata shareholders are being offered 2.8 Glencore shares for every Xstrata share they hold, but several key stakeholders in the mining giant reckon those terms are on the parsimonious side.

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In particular, Qatar Holding, Qatar's sovereign wealth fund, has been vocal in calling for an improved offer. It had originally been petitioning for 3.5 Glencore shares per Xstrata share but has subsequently said it is open to an offer somewhere between that and what commodities trader Glencore is offering.

Qatar Holding has a 12% stake in Xstrata and is in a position to kibosh the whole deal if it is not happy with the terms.

In the meantime, trading in Glencore's shares has been suspended in London and Hong Kong.

Trading in Xstrata's shares in London was lively, with the shares up 55p to 1,034p at around 9:30, half an hour before the scheduled start of Xstrata's EGM.