British miner Xstrata Plc (LON:XTA) said on Monday its independent directors had accepted the final terms of the revised takeover offer from Swiss suitor Glencore International Plc (LON:GLEN).
The Swiss commodities trader, owner of 34% in Xstrata, offered in February to buy the rest of its stock at 2.8 own new shares for each Xstrata share and raised that ratio to 3.05 in September to gain the support of opposing shareholders.
The new share exchange ratio is a 17.6% premium over that implied by closing share prices on 1 February 2012 and 25.5% above the average of the ratios implied by the middle market closing share prices of the two parties between 3 September and 6 September, with the latter being the last trading day before Xstrata unveiled the revised proposal from Glencore.
Under the new agreement, Xstrata’s current CEO Mick Davis will become the CEO of the combined group at the completion of the deal, but he will step down within six months after that and be replaced with Glencore’s current CEO Ivan Glasenberg.
The merger will be carried out as a court-sanctioned scheme which needs to secure 75% of the target’s eligible shareholders votes by value and a majority of them by number.
The independent, non-executive directors of Xstrata see the revised terms of the merger to be fair and reasonable and plan to recommend shareholders to accept them on condition that key managers will be kept as part of the revised management incentive arrangement resolution.
Under the new agreement, however, the merger could proceed without depending on the management incentive agreement being cleared by the target’s shareholders, the companies said.
Xstrata shareholders will receive the proxy forms in October and Glencore will also provide further documentation to its own shareholders this month. The scheme is seen to become effective before the end of December, by which time the buyer expects to secure all needed regulatory approvals, it said.
The planned merger is seen to create the world’s fourth biggest diversified natural resource company and a top producer and marketer of 18 commodities, benefiting from larger scale and diversity in the global resources industry, Glencore and Xstrata said at announcing their tie-up in February.
The deal will see Xstrata going private.