The Board of Directors of Xstrata PLC (LON:XTA) said today, they have urged shareholders to accept Glencore’s $33 billion takeover bid. Switzerland-based Glencore International Plc (LON:GLEN) revised its offer from 2.8 shares per Xtrata share, to 3.05 Glencore shares. Qatar sovereign wealth fund, which holds a 12 percent stake in Xstrata, had opposed the previous bid.
The offer values Xstrata PLC (LON:XTA) at $51.5 billion, or 31.9 billion pounds. According to FactSet, Glencore International Plc (LON:GLEN) has a market value of 23.5 billion pounds. If successful, the deal will create one of the world’s largest natural resources firms, with revenues of over $175 billion, and above 130,000 employees in 40 countries. The Anglo-Swiss company, Xstrata PLC (LON:XTA), produces coal, copper, nickel, and zinc. Glencore, which went public last year, is a trader of raw materials, such as coal, corn, and cotton.
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Now, the management structure and retention bonuses to executives are the primary stumbling blocks. According to the deal, the current chief executive of Xstrata, Mick Davis, will remain in his position for six months, before being replaced by Glencore’s billionaire CEO, Ivan Glasenberg. Davis won’t receive any retention bonus, instead he will get a contract termination fee of $9.6 million.
“My objective during my time as CEO of the combined group will be to preserve and enhance the value Xstrata’s management team has created over the past 10 years, through a well-planned integration process,” said Mick Davis, the chief executive of Xstrata. “A merger will fuse the respective strengths of the two companies into a unique, vertically integrated natural resources group,” he said.