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Glencore, Xstrata embrace merger

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GENEVA, Nov 20 AFP

November 21 2012, 04:00AM

Shareholders of the Swiss commodities giant Glencore and Swiss mining group Xstrata have overwhelmingly approved a merger of the two companies to create a goliath capable of out-muscling nearly everyone in their field.

A full 99.42 per cent of Glencore shareholders first voted in favour of the merger during an extraordinary general assembly meeting in Zug, central Switzerland, on Tuesday morning.

On Tuesday afternoon, 90.8 per cent of Xstrata shareholders followed suit during simultaneous meetings in Zug and London, clearing one of the final hurdles to the massive merger.

If it obtains the necessary regulatory approvals, Glencore-Xstrata should see the light of day, entering the stage as the world's fourth-biggest commodities company in terms of market capitalisation, after BHP Billiton, Vale and Rio Tinto.

Glencore and Xstrata said last month they hope the combined company, with a market capitalisation of around 67 billion euros ($A83.12 billion) and with a combined turnover of $US209.4 billion ($A202 billion), could come into being by the end of the year.

The long deadlocked process advanced last month when Xstrata's main shareholder, Qatar Holding - the energy-rich emirate's top sovereign wealth fund - said it was satisfied with renegotiated terms of the deal.

A number of Xstrata shareholders had also been up in arms over a provision in the initial deal that would have provided massive bonuses to 73 Xstrata executives to ensure they remained with the merged company.

While voting overwhelmingly for the tie-up, 78.43 per cent of the shareholders rejected the bonus plan.

The merger still requires approval by the European Commission, which has said it will give its ruling by November 22, and from competition authorities in China and South Africa - two of the biggest producers and markets for commodities.