Qatar backing puts Glencore's $ 32 bn Xstrata deal on track



REUTERS

Published — Friday 16 November 2012

Last update 16 November 2012 6:19 am

| نسخة PDF Print News | A A

LONDON: Commodity trader Glencore's $32 billion takeover of Swiss miner Xstrata looked set to go ahead after winning the backing of Qatar Holdings, the bid target's second-largest shareholder.
Qatar, an unexpected kingmaker in Glencore's bid for Xstrata, said yesterday it would vote for two key resolutions on the takeover, which is aimed at creating a mining and trading powerhouse.
In a snub to Xstrata management, Qatar said it will abstain from voting on a multimillion-pound management retention plan, which increases the chances of that aspect of the deal being voted down.
"In a nutshell, this means the deal is all but done," Liberum analysts said.
Qatar's support for the deal, first announced in February, came after its surprise opposition to terms in June and brought Glencore within weeks of sealing its long-running pursuit of Xstrata.
Separately, sources told Reuters that Glencore offered to sell Xstrata's German smelter to try to win European Union approval for the takeover, in addition to its existing offer to scrap a key zinc sales deal.
Through a series of votes, Xstrata investors will be able to express their views on the management retention plan without endangering the merger.
Xstrata has said the retention plan was necessary to the success of the merger because it will ensure key managers stay on to oversee the shift into a phase of significant volume growth at the company's mining projects.
"If the management incentive arrangements do not get passed, it raises some question marks about the success of the deal," Macquarie analyst Jeff Largey said.
Several Xstrata shareholders, including Standard Life Investments and Fidelity, have criticized the pay plan, arguing that it is unnecessarily greedy.
"I expect the deal to be approved but there to be considerable dissent about the retention packages," one top 40 investor told Reuters.
Qatar was reluctant to become involved in the debate over management pay, which has been raging in Britain since the so-called shareholder spring. Though Qatar has taken an active role in its investments, it was also reluctant to be branded an as an activist investor.
The tiny, gas rich Gulf state of Qatar has built up a stake of more than 12 percent in Xstrata — a key position in a deal structure that allows only 16.5 percent of Xstrata shareholders to block any bid.
Qatar's abstention on the retention plan, which offers more than 70 top executives a total of roughly 140 million pounds ($222 million), will be an embarrassment for Xstrata, which until last month insisted that the takeover be tied to the pay deal.
Macquarie analyst Largey said that Xstrata's image would not be enhanced by its attempt to be "a little too cute" with its stance on the retention scheme and vote.
The position of Xstrata Chairman John Bond, set to retain the role at the enlarged group, will look difficult if there is a vote against the retention scheme. Such an outcome could strengthen the view of some shareholders that, having been behind a retention plan that risked sinking the deal, he should not remain at the helm of the merged entity.
The vote, scheduled for Nov. 20, comes after Glencore bowed to investor pressure with a raised bid in September. Glencore increased its offer to 3.05 new shares for every Xstrata share, from an earlier bid of 2.8 per share.
Shares in Xstrata rose 1.7 percent to 963.7p at 1238 GMT on Thursday, moving closer to Glencore's offer, indicating that the market expects the deal to go ahead, while Glencore's shares traded down 0.54 percent.
EU competition regulators will give their verdict on the tie-up two days after the Xstrata shareholder vote.
The regulators have said that Glencore's offer to end an exclusive zinc sales deal and sell its minority stake in world No. 1 producer Nyrstar is not enough, two people familiar with the matter said yesterday, prompting Glencore to offer to also divest an Xstrata smelter in Germany which produced 148,000 tons of zinc last year.
Antoine Colombani, spokesman for competition policy at the European Commission, would not comment on the matter.

What's happening around Saudi Arabia

ABHA: Several Saudi businesswomen started traveling with a group of friends after recent regulations which allow women to travel without their mahram. These women said they find great fun to travel as a group with their friends and their children, wh...
RIYADH: The United Nations, Arab League and Gulf Cooperation Council welcomed the Kingdom-led coalition’s announcement of a five-day cease-fire, that took effect at midnight on Sunday, to push humanitarian relief in war-ravaged Yemen to the beleaguer...
ALKHOBAR: Jobless Saudi women constitute 70 percent of the unemployed. The Ministry of Economy and Planning said 58 percent of the jobless have preparatory school level education. According to the statistics, the annual unemployment growth rate among...
RIYADH: Saudi Arabia has found traces of a civilization that was domesticating horses about 9,000 years ago, 4,000 years earlier than previously thought. The discovery has shed new light on the origin of the Arabian horse, which has remained a great...
RIYADH: The Ministry of Labor in the Makkah region found 250 laborers working on various construction projects during restricted hours of the day. Punitive measures will be taken against the employers of these workers. According to a ministerial decr...
JEDDAH: When poverty is your guest for 15 years, gardens, parks, streets and pavements become your abode under the unavoidable scorching sun. One has to face hardships of hunger and survive on breadcrumbs. This is the situation of a 60-year-old Saudi...
JEDDAH: The negative attitudes of society in dealing with harassment and abuse cases prevent victims from reporting a great number of such cases to the authorities.Despite this, about 3,982 cases reached the country's criminal courts in 1435 and 1436...
AL-QATIF: The Omani security forces have arrested a man who, they said, accidentally fired a bullet that hit a young Saudi girl in a hotel in Musandam on Saturday. Four-year-old Zainab bint Mohammed Labad of Al-Awamiyah was playing in the hotel lobby...
Ramon Corvera, deputy chief of mission at the Argentinian Embassy in Riyadh.* Which particular aspect of Saudi Arabia you like the most? The natural beauty of the desert.* What is your favorite and oft-repeated Arabic word? Masha’Allah.* Which book i...
JEDDAH: The creativity and entrepreneurship community program of Umm Al-Qura University brought together 80 creative entrepreneurs to exchange their experiences and knowledge on Monday. Fawaz Saad, the dean of the institute for innovation and entrepr...
RIYADH: The August issue of ‘Nature’, the monthly magazine of King Abdulaziz City for Science and Technology (KACST), will focus on Middle East Respiratory Syndrome (MERS) corona, which has affected 1,055 people in the Kingdom since June 2012.The to...
LILLE, France: Saudi Arabia’s firm stand against the phenomenon of violence as well as religious, ethnic and cultural fanaticism came in for praise at an international symposium, which concluded here.The participants of the symposium on "Media Covera...
DAMMAM: The Saudi Arabian Boy Scouts Association (SABSA) is participating in the 23rd World Scout Jamboree with the slogan “A Spirit of Unity,” which starts July 28 and runs until August 8 in Kirara-hama, Japan. A total of 32,000 scouts from 144 nati...
JEDDAH: The Ministry of Labor was able to increase the number of Saudi women employees from 70,000 to 428,000 during the past four years, Abdul Munim Al-Shehri, assistant undersecretary for special programs, has said . The ministry is now working on...
JEDDAH: A court issued a 10-year prison sentence against a health employee in Al-Ahsa and fined him SR1 million for getting involved in forgery and fraud as well as embezzling public funds in contracts to import medical equipment for the Children and...

Stay Connected

Facebook