Shares in Xstrata, the mining group, start unconditional dealings today at a price that will place the Swiss-based company on the brink of qualification for the FTSE100 index of leading shares.
Xstrata shares were priced at 870p in the institutional offer last week, raising £840m after costs. But the price rose to 1,000p by Friday's close.
JP Morgan, which is advising Xstrata, has chosen to exercise a "greenshoe" option to issue extra shares to raise a further £218m. The extra shares will push the stock market valuation of Xstrata to about £2.5bn, close to the level required for FTSE100 entry.
Xstrata is using the proceeds to pay £1.8bn for the Australian and South African coal interests of Glencore, a private Swiss mining group. Glencore will have a 40 per cent stake in Xstrata, which will join mining giants Rio Tinto, BHP Billiton and Anglo-American on the London market.
Mick Davis, Xstrata's chief executive, is already looking at three other deals worth about $1.5bn-$2.5bn to expand the group's interests and reduce its reliance on coal.
Last week the Takeover Panel rejected an appeal from Xstrata that it should be subject to the panel's jurisdiction.
Xstrata had wanted to be covered by the panel's jurisdiction as part of its objective to be a major constituent of the London stock market. But the panel's rules states that company's whose central place of management is not in the UK should not normally be part of the UK panel's governance.
Xstrata has some corporate functions in London but is headquartered in Switzerland.
The panel's decision will not affect Xstrata's chances of becoming a FTSE100 stock. The next FTSE review is in June.Reuse content