European Commission extends ruling deadline on Xstrata’s merger with Glencore

Mining

The European Commission (EC) said on Wednesday it had extended to 22 November the deadline for its ruling on the planned merger of British miner Xstrata Plc (LON:XTA) and Swiss commodities trader Glencore International Plc (LON:GLEN).

The regulator, which was due to announce its decision by 8 November, said on its website that the Swiss commodities trader had offered concessions on Tuesday, without giving any details. Glencore did not wish to specify its proposals either.

Earlier this week, an insider cited by Reuters said that the EU anti-trust watchdog had requested Glencore to make disposals in its zinc operations before it could make a decision on the deal. The move could help the Swiss group avoid a further delay of the planned merger, which could otherwise be protracted until next year, industry sources said. According to analysts, the combined entity could hold 50% of the European market for zinc, which raises concerns about market concentration. Glencore and Xstrata did not comment on the report.

The assets that could have been offered for concessions include Glencore’s Portovesme, a lead and zinc smelter in Sardinia, Xstrata’s Nordenham plant in Germany, as well as Xstrata’s San Juan de Nieva plant in Spain, considered to be the world’s largest zinc production unit. A source, however, said that San Juan was very unlikely to be on the list because of its large size.

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 merger, which will see Xstrata going private, 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 scheme is expected to take effect before the end of December, by which time the buyer expects to secure all needed regulatory approvals, it has said.

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