Xstrata finally gives nod to merger

Mining group Xstrata gave its long-awaited blessing yesterday to a revised $33bn bid from trader Glencore, bowing to investor pressure by changing the deal to ensure a payment plan to keep its top managers does not sink the tie-up.
By The Newsroom
Published 2nd Oct 2012, 07:00 BST

Xstrata dropped its insistence that the overall deal be tied to a shareholders’ vote on the controversial package which offers over 70 top executives a total of roughly £140m to dissuade them from quitting.

Now, through a complex structure of votes, investors will be able to express views against the retention plan without endangering the merger, bringing the deal closer to a conclusion almost eight months after it was first announced.

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“I am glad that they have recommended the deal and also very pleased that they have unbundled the remuneration issue,” said one of Xstrata’s 40 largest institutional investors.

In the original all-share agreement, backed by Xstrata’s board in February, shareholders had to support both the retention plan, then worth more than £170m, and the Glencore offer itself – or neither.

Xstrata argued its executives would be responsible for achieving the bulk of future profit. The board members later said changes to Glencore’s bid last month – which put the trader’s own chief executive at the helm at the expense of Xstrata’s veteran boss Mick Davis – made the plan even more necessary to avoid a drain of its top executives.