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Regulatory hurdles in China and South Africa delay Glencore and Xstrata merger

Swiss commodities trader Glencore International Plc (LON:GLEN) said that it and UK miner Xstrata Plc (LON:XTA) had agreed to extend the deadline for the completion of their planned merger to 31 January 2013 because of the ongoing regulatory processes in China and South Africa.

Glencore added that South Africa’s competition tribunal hearing was put off until January 2013 and therefore the deal would not close by the end of 2012 as previously planned.

The Swiss company, which owns a 34% stake in Xstrata, offered in February 2012 to buy the rest of the miner’s stock at 2.8 own new shares for each target share and raised that ratio to 3.05 in September to gain the support of opposing shareholders.

The tie-up, which will see Xstrata going private, was cleared last month by the European Commission on condition that Glencore cancels its off-take arrangements for zinc metal in the European economic area (EEA) with Nyrstar NV (EBR:NYR). In addition, the Swiss company would need to shed its 7.79% stake in Nyrstar. Both parties’ shareholders have also backed the deal.


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