Glencore-Xstrata deal delayed again

April 2, 2013

Regulatory issues in China have postponed the closing of the $76 billion merger of Glencore and Xstrata. It is the fifth deadline extension since plans for the merger were first announced in February 2012 and shows how complex the merger is.

Glencore and Xstrata originally announced that they were planning to combine in what would have been the largest mergers and acquisitions deal of the year. That plan was renegotiated in 2012 from a merger of equals into a pure takeover to win the support of shareholders, leading to delays to the original deadline of October 31.

In March, the companies extended the deadline for closing their long-awaited merger for the fourth time from March 15 to April 16, despite having received the approval from the European and South African authorities.

In a stock exchange filing Glencore said the new closing date for the merger between the companies was extended to May 2, subject to the Chinese authorities final decision, the completion of the Xstrata court process and Glencore giving effect to the commitments required by the European Commission.

Glencore and Xstrata are already selling minerals in China and the merged company expects to raise its market share in the country.

"Glencore believes that it has had constructive discussions with the Ministry of Commerce of the People's Republic of China (Mofcom) and that these discussions are now in their final stages," the company said in the stock exchange filing.

"However, Glencore does not expect to receive the final decision from Mofcom in time for the merger to be completed by 16 April 2013,” it added.

The deal would create a mega mining company with a market capitalization of more than $76 billion.

If successful the combined new giant will have revenues in excess of $140 billion with as much as 80 percent of sales earned from mining.
Glencore and Xstrata together control copper mines which account for just under 10 per cent of global supply. But that proportion could increase substantially over the next decade if the combined group follows through on planned investments.


Related article search: