Glencore, the world’s biggest commodities trader, will not raise its offer for Xstrata any further.
On Monday it outlined an improved bid for the mining group, in which it already has a 34% stake. It suggests a merger on the basis of just above three Glencore shares for each Xstrata share, up from its initial proposal of 2.8 shares. Its offer therefore goes up from 31 to 36 billion dollars – that’s about 29 billion euros – representing a 27% premium on Xstrata’s closing share price on Wednesday.
In London, where both Swiss companies are trading, this improved offer boosted Xstrata’s share price on Monday. It was up 1.7%, while Glencore’s was down 2.1% as investors fear such a merger ratio might be too high.
Xstrata was expecting more though. Its second biggest shareholder, Qatar’s sovereign fund, had blocked the deal in June, asking for 3.25 Glencore shares per Xstrata share. And the fact that Glencore wants its own people at the head of the merged company is a risk, according to Xstrata, that demands a substantial premium.
The Glencore-Xstrata saga started in February. Within eight months, Xstrata has lost more than 18% of its value in London, Glencore nearly 20%. Xstrata said it would answer Glencore’s final bid by the 24th of September.