COMMODITIES trader Glencore International was forced to raise its offer for miner Xstrata yesterday in a last-ditch attempt to salvage its £56bn takeover plans.
Glencore said it would offer 3.05 shares for every Xstrata share, a 9 per cent hike on its previous bid of 2.8 shares, after one of its target’s biggest investors – the Qatar sovereign wealth fund – refused to back the deal.
The new proposal would also see the deal structured as a takeover rather than a merger of equals, and Glencore boss Ivan Glasenberg would remain as chief executive of the company, whereas he had previously planned to let Xstrata’s Mick Davis take the helm.
The move comes after Glencore cancelled a meeting to vote on the bid at the last minute and asked for its shares to be suspend- ed.
Shares in Xstrata rose 6 per cent yesterday while Glencore’s fell 6 per cent.
The fresh bid came amid fears that shareholders would reject the previous offer.
Qatar, which also owns Harrods department store and a significant stake in supermarket Sainsbury’s, is Xstrata’s second biggest shareholder with a 12 per cent stake, while other shareholders were also thought to be hostile.
Because Glencore cannot vote with its own 34 per cent stake in Xstrata, a no-vote from 16.75 per cent of investors is all that is needed to block the deal.
Mr Glasenberg is understood to have been hatching plans for the mega-merger for five years although he had resisted earlier demands by Qatar to increase the bid to 3.25 shares for every Xstrata share.
Charles Gibson, head of mining at Edison Investment Research, said: “It’s been a game of chicken between Glencore and Xstrata and Glencore flinched first.”
The mega-merger would create the world’s fourth biggest natural resources firm, worth £56bn.
It would have operations in 33 countries and should be better able to compete against bigger rivals BHP Billiton and Rio Tinto if the merger is backed by shareholders and regulators.
Swiss-headquartered Glencore is one of the world’s largest commodities traders.