Sat, Nov 24, 2012 - Page 15 News List

Glencore-Xstrata tie-up moves one step closer

AFP, BRUSSELS

Protesters wear mock eyeballs during a demonstration in front of the venue of commodities trader Glencore’s extraordinary shareholders’ meeting on Tuesday in Zug Switzerland.

Photo: Reuters

The European Commission on Thursday gave a conditional green light to the massive tie-up between Swiss mining giant Xstrata and commodities trader Glencore that would create a global leader.

“The clearance is conditional on the termination of Glencore’s off-take arrangements for zinc metal in the European Economic Area with Nyrstar, the world’s largest zinc metal producer, and the divestiture of Glencore’s minority shareholding in Nyrstar,” it said in a statement.

Shareholders of Glencore and Xstrata — both headquartered in the tax haven of Zoug in Switzerland — on Tuesday overwhelmingly approved a merger of the two firms to create a goliath capable of out-muscling nearly everyone in their field. If it obtains the necessary regulatory approvals, Glencore-Xstrata would enter the stage as the world’s fourth-biggest commodities company in terms of market capitalization, after BHP Billiton, Vale and Rio Tinto.

Glencore and Xstrata said last month they hoped the combined company, with a market capitalization of around 67 billion euros (US$85.5 billion) and with a combined turnover of US$209.4 billion, could come into being by the end of the year.

The long deadlocked process advanced last month when Xstrata’s main shareholder, Qatar Holding said it was satisfied with renegotiated terms of the deal.

A number of Xstrata shareholders had also been up in arms over a provision in the initial deal that would have provided massive bonuses to 73 Xstrata executives to ensure they remained with the merged company.

Under the new terms, shareholders voted separately on the merger and the bonuses, which are worth a total of £144 million (US$229 million).

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