Glencore improves takeover bid, Xstrata to respond by 24 September

9 September 2012 (Last Updated September 9th, 2012 18:30)

Glencore has improved its offering to Xstrata shareholders with a view to conclude its long drawn takeover bid of the mining major with a response now expected by 24 September 2012.

Glencore has improved its offering to Xstrata shareholders with a view to concluding its takeover bid of the mining major with a response expected by 24 September 2012.

A shareholder meeting last Friday was postponed at the last minute, leading to speculations that an improved offer would be made.

The company's earlier bid of $34bn has now been improved to $36bn, an increase in the offer price from 2.8 shares in the new company for each existing Xstrata share to 3.05 shares, a 27% premium on the share prices last week.

Glencore will allow Xstrata CEO Mick Davis to continue in his position in the merged entity but he will have to vacate the position within six months to allow Ivan Glasenberg to take his place as the new CEO.

In a statement issued by Xstrata, the miner outlined that a decision on the improved offer will be taken by its independent directors before 0600GMT on 24 September.

"The independent non-executive directors will consider carefully the proposal received and consult with major shareholders before responding," said the statement.

The improved offer is seen as a 'take-it-or-leave-it' option before Xstrata, as the company said in a statement, "Glencore confirms that it is an all-share merger, and it will not increase the merger ratio further."

Though Glencore holds the majority stake in Xstrata, Qatar Holdings fiercely opposed the proposed bid, which led to a discussion between both companies to resolve the stalemate.

In a related development Knight Vinke, an independent investor who owns a little less than 0.7% of Xstrata's stock, rejected the improved offer on 9 September.

According to a statement from Knight Vinke, "the value of Xstrata is substantially more than Glencore is proposing today."