Glencore’s US$34 billion faltering takeover bid for miner Xstrata appeared to be back on after the commodities trader postponed a shareholder meeting yesterday, a sign that it might have improved its offer.
Glencore chairman Simon Murray gave no details, telling shareholders in Zug, Switzerland, only that there had been “developments,” hinting at an improved deal.
“It has happened very recently, overnight,” he said.
Glencore, with a 34 percent stake, has long coveted a full tie-up with Xstrata to create a mining and trading powerhouse. However, the bid had been teetering on the brink of collapse after Xstrata’s second-largest shareholder, Qatar, said it would vote against Glencore’s offer of 2.8 new shares for every Xstrata share held.
“If Glencore’s adjourning the meeting, then it looks like they probably will be raising the exchange ratio,” an analyst who declined to be named said.
One of Xstrata’s largest 40 shareholders expressed surprise at the last-minute adjournment and was hopeful of a bump-up in terms.
“The deal as was wasn’t going to happen, so maybe [Glencore chief executive Ivan Glasenberg] has come in with an eleventh-hour revision. Compromise of exchange ratio of 3?” the analyst said.
Glencore said in a statement it was “considering its options” and would update the market in due course. In the meantime it has asked for its shares to be suspended in London and Hong Kong.
Glencore investors were due to have met at 9am, with Xstrata’s shareholders meeting two hours later, also in Zug, Xstrata’s home base.
“In situations like this, as you can imagine, people are working to reach a deal as quickly as possible,” a source familiar with the process said.
Other sources familiar with the process said it was not clear a deal could be hammered out in time before the Xstrata shareholder meeting.
“The whole thing is on ice,” another said.
If Glencore has changed the terms of its offer at the last minute, both companies would have to delay the shareholder votes to meet regulatory requirements, probably by at least two weeks.