Independent directors at Swiss miner Xstrata PLC have been given another week to decide whether to recommend shareholders approve a takeover by global commodities trader Glencore PLC, and help create a major new diversified resource player.
“The extension was requested to enable Xstrata’s independent, non-executive directors to take full account of feedback from consultation with key Xstrata shareholders,” the miner said in a brief statement on its website, not providing further details about the process.
“An extension has been granted by the (takeover) Panel and the independent non-executive Xstrata directors will announce their response by 07h00 London time on Monday 1 October 2012.”
The delay will come as a surprise to market analysts who had expected Xstrata directors to recommend in favour of the deal on Monday, Sept. 24, when a decision was originally due.
Glencore has been courting Xstrata since February, when it made its first offer for a company that has actually been in its sights for years.
Glencore is vying to become a diversified commodities player that is able to compete with likes of BHP Billiton Ltd., the world’s largest diversified miner, and close rivals Rio Tinto PLC and Vale SA.
The takeover would be the largest of any industry in 2012, and create an $80-billion company that combines Xstrata’s cash-generating mining portfolio with Glencore’s marketing machine, already proven across its agricultural, oil and gas and metals divisions.
Glencore, also a Swiss company, offered 2.80 of its shares for each Xstrata share in its first proposal in February, but shareholders led by 12-per cent owner and sovereign wealth fund Qatar Holdings said the figure was too low, and asked for a share ratio of 3.25. Glencore met them halfway earlier this month with a sweetened bid of 3.05 of its shares for each Xstrata share.
“As a result we see 60-plus per cent probability that the merger will happen,” UBS Investment Research wrote in a research report on Sept. 18.