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Glencore-Xstrata tie-up in final stage

Glencore-Xstrata tie-up in final stage
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One of the biggest takeovers in mining history is on the verge of going through after nine months of on-off negotiations.

Shareholders in the commodities trading company Glencore overwhelmingly passed the 26-billion euro mega-merger with the mining firm Xstrata.

Xstrata’s shareholders have also approved the tie-up, though they dealt a blow to the board by throwing out a golden handcuff deal for managers.

Glencore sees big benefits in a tie-up between a company that mines commodities and another that trades them. It is already Xstrata’s largest single shareholder and is offering just over three of its own shares for each one of Xstrata’s.

Market commentator at broker BGC, Mike Ingram, said: “The real issue going down the road is how is this mega merger going to be viewed in the economy in 3-5 years time? Is it going to mark the top of the cycle? Is it a defensive merger? Or is it a strategically progressive move?”

The final hurdle for the Anglo-Swiss companies lies at the European Commission which is looking at the deal from the standpoint of how it affects competition.

That decision is expected to be announced before the end of the week.