Glencore may pay double premium for Xstrata merger


Glencore International may need to double the premium it agreed to pay the owners of Xstrata, to complete the mining industry's biggest takeover.

The firm, which owns 34% of Xstrata, offered 2.8 shares for each one of Xstrata's. That ratio represents an 8% premium, but some shareholders say the merger undervalues their shares.

Yesterday, Xstrata's biggest shareholders, Standard Life and Schroders, said they would vote against the merger if Glencore didn't boost its all-stock agreement.

Only 16% of Xstrata's register has to vote against the deal to block it.

Glencore can afford to offer at least three shares, increasing the takeover premium for Xstrata to 16%, reports Bloomberg.

Earlier this week, Glencore agreed to buy Xstrata in an all-stock deal currently valued at $37.6 bn.

The merger, if it goes ahead, will create a $90bn major natural resources group to be named Glencore Xstrata International, which is expected to have $209bn in sales.

The new entity will also become one of the five biggest suppliers of copper and nickel.