Xstrata Chief Executive Says Majority of Holders He Spoke to Back Merger
“I’ve spoken to quite a few shareholders before we announced the deal and the majority of the shareholders I spoke to were clearly behind the logic of the deal,” he said in a conference call with U.S. analysts and investors today.
Glencore, which already owns 34 percent of Xstrata, offered 2.8 new shares for each one held in the Zug, Switzerland-based coal exporter, the companies said today. The offer values Xstrata at about 39.1 billion pounds ($62 billion), they said. The price represents a premium of 17 percent based on Xstrata’s average share price over the past 20 days, compared with the 23 percent average paid in 2011 mining deals, according to data compiled by Bloomberg.
Standard Life Investments Ltd. and Schroders Plc (SDR), with a combined 3.5 percent stake in Xstrata Plc, are among shareholders planning to oppose the proposed 26 billion-pound ($41 billion) merger. Huy Hoang, a fund manager at HDH Capital Management Pte, said he was against the plan.
“There’s a long way to travel before we get to a final shareholder vote and a lot of that requires us to be speaking to the shareholders, sharing the merits of the deal,” Davis said.
Xstrata declined 4.9 percent to 1,200 pence in London at 3:39 p.m., while Glencore slid 3.5 percent to 444.8 pence.
The combination would create a business with $209 billion in sales, the companies said. Davis, 53, will become CEO of the combined group, while Glencore CEO Ivan Glasenberg, 55, will be deputy CEO and president.
“We think it’s structured well, we think the governance is right, the terms are right,” Davis said. “We don’t see it in a context that this is just a trial and if it doesn’t work we’ll come up with something else. We think this is the deal and we think it’s in the best interest of the shareholders.”
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