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Xstrata sets September date for Glencore takeover vote

by Paul Whitfield | Published July 11, 2012 at 10:00 AM

Xstrata plc shareholders will get their chance to vote on the mining company's controversial takeover by Glencore International plc on Sept. 7, giving the would-be buyer about two months to woo reluctant investors.

London-listed Xsrata's shareholders had been due to meet on July 12, but the meeting was pulled following an outcry over about £172 million ($267 million) of executive retention bonuses for Xstrata management written into the terms of the takeover.

Xstrata changed the bonus terms on June 27, switching the proposed payments from cash to shares and including some performance-based criteria in the awards to its top seven executives.

"The terms of the merger remain otherwise unchanged," Xstrata said Wednesday, July 11.

Most investors, however, expect changes to Glencore's £26 billion ($40.4 billion) takeover offer before it goes before shareholders for approval. Glencore executives are talking with Xstrata's No. 2 shareholder, Qatar Holding LLC, a subsidiary of the oil-rich nation's sovereign wealth fund Qatar Investment Authority. Qatar Holding said June 26 that it would vote against the Xstrata deal unless terms were improved.

Qatar wants an exchange ratio of 3.25 new Glencore shares for each Xstrata share, a 16% increase on Glencore's current offer of 2.8 of its shares per Xstrata share. Knight Vinke Asset Management LLC, Standard Life plc, Schroders plc and Fidelity Worldwide Investment, which together hold about 3.5% of Xstrata, have also said they will vote against the deal unless Glencore improves its offer.

A rebel group holding about 16.5% of Xstrata's share capital would be large enough to block the deal. The acquisition needs the support of 75% of Xstrata shareholder base excluding Glencore, which is blocked from voting its 34% stake.

Separately, Glencore said Wednesday that it had agreed to pay $160 million in cash for Vale SA's European manganese ferroalloys operations, the first time it has acquired manganese production assets.

Baar, Switzerland-headquartered Glencore will take control of operations in Dunkirk, France, and Mo I Rana, Norway, that together produce 260,000 tonnes of manganese ferroalloys per annum.

"The acquisition of these operations will add further value to Glencore as the company continues to grow its ferroalloys business," Glencore said.

Shares in Glencore traded Wednesday in London at 312.4 pence, up 1.55 pence, or less than 1% on their previous close. Shares in Xstrata traded at 831.4 pence up 4.9 pence.

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Xstrata sets September date for Glencore takeover vote

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