By Clara Ferreira-Marques and Victoria Howley
CAPE TOWN/LONDON Feb 5 (Reuters) – Top executives at
trader Glencore and miner Xstrata are hammering
out the final details of an $80 billion tie-up to seal the
industry’s largest ever takeover, which could be announced as
early as Tuesday.
Xstrata, in which Glencore already has a 34 percent stake,
announced last week it had been approached by the world’s
largest diversified commodities trader and was in discussions
over an all-share “merger of equals”, a deal that would be the
largest in the sector since Rio Tinto’s takeover of Alcan in
2007.
The agreement is set to be announced this week, potentially
Tuesday, when Xstrata is due to publish 2011 results.
One source involved in the proceedings described the mood
behind the scenes over the weekend as “constructive”, and others
said brushed off concerns the latest round of talks would
collapse over either of the two hurdles that have tripped them
up in the past — governance and price.
The two groups, which restarted discussions before Christmas
after years of on-off talks, have reached a preliminary
understanding on the structure of the top management, according
to sources familiar with the deal, with Xstrata expected to take
a majority of seats on the board, to keep its chairman, City
heavyweight John Bond, as well as its chief executive, Mick
Davis, and its chief financial officer, Trevor Reid.
Glencore Chief Executive Ivan Glasenberg, who will be the
largest single shareholder in the combined mining and trading
entity, is expected to hold a deputy position.
Davis, who has been at the helm of Xstrata for a decade, is
expected to receive an up to 10 million pound ($16
million)retention package in the event of “change of control”,
to stay on as chief executive, the Sunday Times reported.
In the past, the issue of price and premium and the
difficult valuation of Glencore’s marketing business has
separated the two companies, but the two are this time
discussing a percentage premium to Xstrata’s share price in the
“low single digits” — effectively a ratio to balance out the
value of both companies, according to several of the sources.
Continued…
