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The stalemate in the £48 billion merger terms offered by Glencore (LSE:GLEN) to Xstrata (LSE:XTA) will remain to be as it is even as Glencore has officially announced its revised terms yesterday.
Qatar Holding LLC, owner of about 12% of Xstrata and its second biggest shareholder, hinted today it needs more time to study Glencore’s new all share merger offer of 3.05 shares for every one of Xstrata’s before it could give its decision whether to agree or not.
The sovereign wealth fund was reported to be supportive of the new terms, which was revealed by Xstrata last Friday, although no official statement was released by Qatar at that time.
In a statement today, however, the global investment house said it “wishes to make clear that it has made no decision yet as to whether or not it would accept the Revised Proposal.”
Back in June, Qatar caused Glencore’s Chief Executive, Ivan Glasenberg, to be in “frantic calls” after it threatened to vote against the deal should its demand of 3.25 Glencore shares for every Xstrata share is not met.
Qatar’s vote is crucial to the deal as only 16.5% of shareholders’ votes are needed to thwart the much anticipated merger of the year to create another global mining powerhouse.
Merger or Takeover?
But some analysts were saying, nonetheless, that the Glencore-Xstrata union will push through one way or the other, as the stakeholders will find a way to resolve the standoff in the terms. When the merger fails to materialise, analysts say it may hurt both Glencore’s and Xstrata’s market valuation.
In Glencore’s official statement of the revised terms of the merger yesterday, the largest publicly listed commodities trader hinted the possibility of a takeover bid, which would only require a simple majority vote to push through. It already owns about 34% of Xstrata.
Glencore also stated the 3.05 shares it offers for every one of Xstrata’s is the highest bid it can make and will no longer raise the price even further.
Xstrata’s seven independent directors will have until 24th September to decide whether or not they will recommend Glencore’s full and final offer, saying they will consult with major shareholders before responding, which means Qatar Holding will have a say on the matter before putting it to vote with the rest of Xstrata’s stockholders.
“QH will make its decision in due course after giving careful consideration to the implications of the proposed management changes, the other elements of the Revised Proposal and the views of Xstrata’s board,” the fund said.
Meanwhile, shares of both FTSE 100 constituents were in the red on the London Stock Exchange by 11:00 AM GMT, losing 1.6% and 1.8% to £3.64 and £10.08 for Glencore and Xstrata, respectively.
