Glencore tells Xstrata investors its bid is final

XSTRATA ROSE to a four-month high in London as investors bet a 9 per cent increase in Glencore International’s offer for the Swiss mining company boosts the odds this year’s biggest takeover will be completed.

Xstrata, the world’s largest exporter of coal for power stations, advanced 1.2 per cent to close at 1,026.5 pence, the highest since May 11th.

The target of Glencore’s $35 billion offer will “consider carefully the proposal received and consult with major shareholders before responding”, it said in a statement yesterday.

“We expect this transaction to be completed under the revised proposed terms,” Jefferies Group analysts Christopher Lafemina and Seth Rosenfeld wrote in a report.

Glencore chief executive Ivan Glasenberg yesterday made his final offer as he seeks to shore up support for the all-stock deal after investors including Qatar’s sovereign wealth fund opposed his original bid.

There’s now an 80 per cent chance of the bid succeeding, Liberum Capital said after Glencore raised its offer to create the fourth-largest mining company to 3.05 of its shares for each one in Xstrata, from 2.8.

Glencore, the world’s largest publicly-traded commodities supplier, declined 2.1 per cent to 370 pence. Xstrata stock traded at 2.77 times that of Baar, Switzerland-based Glencore, up 3.4 per cent from a ratio of 2.68 on September 7th.

Along with the sweetened terms, Glencore said its revised takeover plan would see Xstrata chief executive Mick Davis departing within six months. Mr Davis, (54) a South African, would run the combined group before handing over to Mr Glasenberg, Glencore said.

That scraps an earlier plan for the Xstrata head to take the top job. Glencore said its offer represents a “substantial premium” for a company with a 34 per cent shareholder, referring to its stake in the company, which also produces copper, zinc, nickel and lead from mines in Australia, South Africa, South America and Canada. Davis is ready to step down, provided shareholders get the right price, a person familiar with the situation said of Xstrata. – (Bloomberg)