Glencore, Xstrata Extend Takeover Deadline to March 15

Glencore International Plc (GLEN), the largest publicly traded commodities supplier, and coal producer Xstrata Plc (XTA) agreed to extend the deadline to complete their 22.6 billion-pound ($36 billion) combination to March 15.

Regulatory processes in South Africa and China “remain ongoing” and the U.K.’s takeovers panel has consented to extending the deadline from Jan. 31, Baar, Switzerland-based Glencore and Xstrata said in statements today.

Glencore on Nov. 22 won European Union approval for its takeover of Zug, Switzerland-based Xstrata after offering to end a zinc-purchase agreement with Nyrstar (NYR) NV and sell its stake in the company. The combination would create the world’s fourth- biggest mining company.

As a hearing by South Africa’s Competition Tribunal opened in Pretoria today, counsel for state-run power utility Eskom Holdings SOC Ltd. Rafik Bhana said the company had agreed to withdraw its intervention in the transaction.

The terms Eskom has agreed to are confidential, a point criticized by competition regulator deputy commissioner Tembinkosi Bonakele as “not desirable.”

The agreement between Eskom and the two companies provides a framework with a key supplier, Hilary Joffe, a spokeswoman for the utility, told reporters today in Pretoria, without elaborating. Eskom, which relies on coal to fuel more than 80 percent of its generation, had raised concern it would be unable to secure supplies at competitive prices.

Export Capacities

The utility already has long-term coal supply agreements and suppliers for its power stations and the export capacities of Glencore and Xstrata won’t change with the merger, according to David Unterhalter, a lawyer for the two companies. “Nothing about the situation suggests any problem for Eskom that is merger specific,” he told the tribunal.

South Africa’s National Union of Mineworkers, the second party due to give evidence at the tribunal, is “satisfied” with the Glencore-Xstrata deal, NUM representative Lungile Tyatya told the hearing.

Glencore rose 0.6 percent to 382.25 pence in London trading at 2:27 p.m., while Xstrata gained 0.8 percent to 1,147 pence.

The final decision on the merger by the competition tribunal is expected within 10 days, said Nandi Mokoena, a spokeswoman for the regulator.

To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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