Commodities trader Glencore laid out its raised $36 billion all-share bid for Xstrata on Monday, warning it would not improve the terms again after making concessions to recalcitrant shareholders.
Glencore, the miner’s largest shareholder, with a 34% stake, confirmed its bid was now 3.05 new shares for every Xstrata share held, up from 2.8. That represents a 27% premium to the ratio at which the two were trading last week, when the market believed the deal would collapse.Monday’s offer, expected after Glencore and rival Xstrata shareholder Qatar ended months of stalemate on Friday, softens points included in proposals initially released last week, explicitly retaining a merger structure, board balance and a retention scheme for the miner’s top managers.
By retaining the original legal structure, 75% of shareholders excluding Glencore have to approve any deal. Glencore had raised the possibility of switching to a straightforward takeover, with a simple majority. “Glencore confirms that it is an all-share merger, and it will not increase the merger ratio further,” Glencore said.
“The increased merger ratio represents a substantial premium for a company with a 34% shareholder,” it added.
Shares in Xstrata were up 3.9% at 0715 GMT, while Glencore was up 0.5%.
Xstrata said its independent directors were considering the fresh bid and would respond by on September 24 after consulting with major shareholders.
“The new proposal is structured far less aggressively than the straight takeover hinted at on Friday,” Liberum analysts said, adding they now expected the revised structure to get Xstrata’s board’s approval, as it addresses governance and the merger structure.