Xstrata pushes back merger vote until September

Mining group Xstrata has confirmed that it is pushing back its shareholder vote on its merger with Glencore International from July 12th to September 7th but has assured that the terms of the potential tie-up remain unchanged.

The firm announced last week that it would be adjourning the extraordinary general meeting until a later date due o the proposed changes to the management retention awards announced last month.

The firm said on June 27th that, after a backlash from angry investors, it would pay management their retention awards in shares instead of cash and they will be subject to their future performances. The performance criteria linked to the awards for all directors will be based on realising additional cost savings as a result of the merger in the two years following the merger.

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Xstrata said that since the publication of the scheme circular on May 31st, the Australian Competition and Consumer Commission has approved the transaction and the US Department of Justice has allowed the Hart-Scott-Rodino waiting period to expire without taking any action or seeking any type of remedy.

"The merger review process is ongoing in both China and South Africa and the parties continue to engage in constructive discussions with the European Commission ahead of formal notification of the transaction. Glencore and Xstrata continue to anticipate completion of the Merger early in the fourth quarter."

Jefferies said on Monday that it expects Glencore will eventually raise its proposed merger ratio from 2.8 to at least 3.0 Glencore shares per Xstrata share in order to win the approval of Xstrata shareholdings, especially Qatar Holdings, the 10.4% stakeholder that has come out and demanded better terms.

"We believe a merger between Glencore and Xstrata is strategically important for bothcompanies, and we have a positive view on the long-term fundamental outlook for the merged company. We would expect Glencore and Xstrata shares to perform well on any developments that would increase the probability of the merger succeeding," the broker said.

BC