Glencore, Xstrata agree to all-share merger

The Swiss-based commodities trader Glencore said on Tuesday that it had reached agreement with Swiss mining group Xstrata on a merger that would create a global group worth $90-billion.

“The Glencore directors and the independent Xstrata directors have reached agreement on the terms of a recommended all-share merger of equals,” a statement issued by Glencore said.

The deal seeks to create “a major natural resources group with a combined equity market value of $90-billion” that would be “fully integrated along the commodities value chain, from mining and processing, storage, freight and logistics, to marketing and sales.”

Xstrata shareholders are to receive 2.8 shares for each Glencore share they hold, “excluding Xstrata shares already owned by the Glencore group,” the statement said.

That would give Xstrata shareholders other than Glencore a 45% stake in the combined entity, it added.

The new company is forecast to increase production by 11% annually to 2015 and have a significant presence in African copper mines as well as in Kazakhstan and South America.

Xstrata chief executive Mick Davis is to take over as head of the combined group, with Glencore CEO Ivan Glasenberg as his deputy.

In the 12 months ending December 31, Glencore reported $186.2-billion in sales and had core earnings before exceptional items of $6.5-billion.

Xstrata had sales of $33.9-billion over the same period and core earnings of $11.7-billion, the statement said.—AFP