Glencore/Xstrata merger approved

 

A multibillion-pound merger to create a new natural resources powerhouse was approved by shareholders today - but without paying a controversial retention package to senior managers.

Commodities trader Glencore and mining giant Xstrata will merge under a £56 billion deal following months of wrangling between the companies and investors.

Glencore shareholders backed the move this morning, while Xstrata investors voted in favour of the deal as long as a £227 million pay deal for its top managers was not included.

Xstrata later said the deal would go ahead without the retention package in a major coup for Glencore chief executive Ivan Glasenberg, who will head the newly formed firm.

Xstrata and Glencore - among the top 20 firms on the London stock market - will have operations in 33 countries and should be better able to compete against bigger rivals BHP Billiton and Rio Tinto once the deal completes.

The companies still need competition approval by the European Commission.

Sir John Bond, Xstrata chairman, said he would step down once a new independent chairman of the Glencore-Xstrata group was found, after the incentive package was voted down.

He said: "I have said consistently that I would do what is in the best interests of the company."

Xstrata chief executive Mick Davis added that he regrets the decision of shareholders not to approve the retention arrangements as it will introduce "unnecessary risks to the merged company's future value proposition".

He went on: "Glencore Xstrata has the potential to become a very significant company in the resources world and Xstrata's people will be a critical element of this success."

Glencore, the world's biggest commodities trader, with products including oil, coal, gold and foodstuffs, has been circling Xstrata for a number of years and has already built up a sizeable stake in the group.

Last year Glencore became the first company in 25 years to be fast-tracked into the FTSE 100 Index in London's largest flotation.

Anglo-Swiss firm Xstrata is the world's biggest exporter of thermal coal and also produces copper, nickel and zinc. It also has a lead smelter in Kent which employs around 100 staff.

The two firms were forced to address board composition concerns, offering assurances that Xstrata will retain the majority of directors on the combined board.

Mr Glasenberg improved the terms of the bid earlier this year after former prime minister Tony Blair was reportedly drafted in to help broker a meeting between Glencore and Qatar.

Middle East sovereign wealth fund Qatar Holdings - Xstrata's second largest shareholder - had threatened to block the merger because it believed the original deal was too low.

Mr Glasenberg increased the bid but demanded control of the combined group in return.

Under the original terms, Mr Glasenberg was due to be deputy chief executive in the new firm, with the top job going to current Xstrata boss Mick Davis.

PA

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific