Xstrata to back Glencore's merger proposal

Swiss diversified miner Xstrata Plc is expected to support the revised mega-merger proposal from global commodities giant Glencore International Plc, before the end of the final deadline today, paving the way for the creation of one of the world's largest mining and commodities powerhouses.

The Telegraph reported yesterday that Xstrata's board, led by chairman John Bond, has agreed to the final points of its recommendation including a promise to Xstrata retaining the majority of the directors on the board of the combined entity.

Last week, Xstrata was given a one-week extension by the UK Takeover Panel to decide on the merger saga that has been lingering on for over 7 months. (See: Xstrata delays Glencore merger decision)

Earlier in September, in a last-minute attempt to save the much-hyped deal from a collapse, Glencore improved its offer to $36-billion or an exchange ratio of 3.05 shares of Glencore for every Xstrata share, in place of the original ratio of 2.8 shares.

Xstrata's second-largest shareholder after Glencore, Qatar Holding–the Gulf state's sovereign wealth fund–which owns a 12-per cent stake in Xstrata, had earlier indicated an exchange ratio of 3.25 for the deal to proceed.

If the deal goes through, Glencore's CEO Ivan Glasenberg will take the helms of the combined entity after six months, fulfilling his dream of reunification of two Swiss giants. Xstrata was spun off from Glencore about a decade ago.