Shareholders await prospectus for Glencore-Xstrata merger

  • @MLeftly

The prospectus outlining the creation of a £50bn-plus commodities empire will be sent to shareholders of the two FTSE-100 group's involved this week.

Xstrata spun-out of commodities trader Glencore as a collection of coal assets 11 years ago, but is now set to rejoin its former parent in a "merger of equals". Glencore boss Ivan Glasenberg has long harboured hopes of bringing Xstrata back into the fold and retained a 34 per cent stake in the company.

However, Mr Glasenberg has angered some Xstrata investors by not offering a premium to compensate for what will be a riskier merged group. Instead, he has allowed Xstrata to fill the top jobs – Mick Davis and Sir John Bond will retain their chief executive and chairman titles respectively.

Investors will pore over the prospectus for details of Mr Davis's retention plan. There is speculation that he will only lead the combined group for a year or two and then allow Mr Glasenberg, who will be deputy chief executive, to take over.

However, it is understood that there will be a strong incentive plan to encourage Mr Davis to lead the company for some time. Mr Glasenberg would still also hold the title of president.

The merger faces a potential Xstrata shareholder rebellion and needs approval from European antitrust regulators.