Qatar wants sweeter deal for Glencore-Xstrata merger

Just days before the wedding of commodity trader Glencore International and miner Xstrata, the Qatar state investment group demanded a sweeter deal. Qatar Holding, which owns 10% of Xstrata, wants an exchange ratio of 3.25 new Glencore shares for one Xstrata share, which values the deal at about $30 billion. Glencore’s proposal offered 2.8 of its shares for each Xstrata share, for about $24 billion.

Although Glencore owns 34% of Xstrata, it is not allowed to vote on the deal. The company has also been under fire from two other Xstrata investors, Standard Life and Schroeders, which believe the original bid undervalues Xstrata. Along with a few other unhappy investors, they could block the merger if certain terms are not met.

Some of those terms include cutting down on the large retention packages for 73 Xstrata executives, which were criticized by investors because incentives were not linked to performance targets.

Anxious for the deal to go through, Glencore is mulling over the terms of the packages to retain executives, which might mean cutting pay and adding ties to performance for those top execs. Most analysts believe the wedding will still go on in mid-July, and that the negotiations between Qatar Holding and Glencore will be mutually beneficial. The two are talking it over in London today.

 

Bobby Duncan

Bobby Duncan is a Hoover’s text editor. In addition to covering environmental, mining, and chemicals companies, she likes to monitor the role of people in business.

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