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

JEDDAH: Timely intervention by Deputy Crown Prince Mohammed bin Salman helped move a Saudi woman, who was declared “brain dead” in the US, to the Kingdom.Hani Matar El-Enzi was quoted as saying by an online publication on Wednesday that his wife, Bas...
RIYADH: The world’s fattest man from Jazan has shed 320 kg in almost three years and a video online showed him taking his first steps with the help of a Zimmer frame, thanks to the role of the Ministry of Health in the weight-loss program.Khaled Mohs...
JEDDAH: The National Society for Human Rights (NSHR) has questioned the fairness of Saudis being sentenced to death in Iraq.The organization believes the sentences have been issued against the backdrop of “sectarian pressures” and that the regional s...
RIYADH: The $22-billion Riyadh Metro project is going on according to the plan despite the fact that many global projects are faltering.“There are many stalled projects all over the world and not in the Kingdom alone, but the metro project in the Sau...
JEDDAH: Four members of the Commission for the Promotion of Virtue and the Prevention of Vice (Haia) were stabbed by a youth who was allegedly trying to blackmail a girl in Jeddah. The incident happened on Tuesday night and the four officers, who sus...
RIYADH: A recent report released by the Ministry of Labor revealed that the number of violations registered on the ministry’s electronic program “Together for Monitoring” in the months of December 2015 and January 2016 amounted to 484, of which 157 w...
RIYADH: Health Minister Khalid Al-Falih visited the medical complex in Thuwal, near Jeddah, on Tuesday. The facility was set up by Saudi Aramco, whose chairman is the health minister himself.According to the minister, the complex provides primary hea...
JEDDAH: A number of Shoura Council members have voiced objections to some imams who express their personal opinions during Friday sermons.The members asked the Ministry of Islamic Affairs to supervise the sermons to make sure they were written by spe...
MADINAH: Street vendors near the Prophet’s Mosque pose a risk to the country’s reputation and economy besides blocking the way of service cars, Red Crescent and Civil Defense vehicles, an expert has said.Ninety-eight percent of these street merchants...
RIYADH: Appropriate action has been taken against the Haia members who were involved in beating up a girl opposite the Nakheel shopping mall here recently, but the girl was also at fault, a Haia official has clarified.“A probe has revealed that the g...
I am from the east of France but moved to Saudi Arabia from Paris in 1990. I worked for a princess as a French language tutor. I was young and single. I thought it was very exotic and mysterious. I lived in a palace. I left Saudi Arabia in 1992 and c...
JEDDAH: The Pakistan Repatriation Council (PRC) held a symposium on Kashmir and the obligation of Muslim world toward Kashmiris.It was presided by Ali Al-Ghamdi, a former Saudi diplomat. Other guests and speakers at the event were Shahid Nayeem, pres...
DAMMAM: A total of 627 kidney transplant surgeries were performed in the Kingdom last year, bringing the number of kidney transplants, performed since the beginning of the organ donation program, to 9,000 surgeries, said Dr. Faisal Shaheen, director...
ABHA: Saudi women spend more on cosmetics compared to women in the West, the Arab world and even in the Gulf, economic studies show.Recent statistics issued by the Saudi Customs suggest the amount of imported cosmetics in the past year exceeded SR2.3...
RIYADH: A study is under way to provide health insurance to Umrah pilgrims and domestic workers and certain articles of the health regulations needs to be amended, an official has said.According to local media, the statement was made by Mohammed bin...

Stay Connected

Facebook