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Commodity trader Glencore buying Xstrata in $90b deal.

London: Commodity trader Glencore agreed an all-share takeover of mining group Xstrata worth $90 billion yesterday in the industry's largest ever deal, creating a powerhouse spanning mining, agriculture and trading.

Glencore, the world's largest diversified commodities trading house, will issue 2.8 new shares for each Xstrata share in a deal they said was a 'merger of equals'.

The ratio is a 15.2 per cent premium to Xstrata shareholders compared to its share price last Wednesday before word leaked out about the merger talks, a joint statement said.

"A merger between Glencore and Xstrata offers a unique opportunity to create a new business model in our industry to respond to a changing environment. It is the logical next step for two complementary businesses," said Xstrata chief executive Mick Davis, who will be CEO of the enlarged Glencore.

Share holding

Glencore CEO Ivan Glasenberg, a billionaire who owns 15.8 per cent of Glencore will be president and deputy CEO of the new company. Xstrata chairman John Bond and chief financial officer Trevor Reid will retain their posts.

Xstrata shareholders other than Glencore, which already has a 34 per cent stake in the mining group, will hold 45 per cent of the new company, to be named Glencore Xstrata International.

Xstrata shareholders, some of whom demanded a strong sweetener over the past few days as executives hammered out details, will need to be convinced that growth prospects and synergies outweigh a minimal premium compared to takeover premiums averaging 20 per cent to 30 per cent in the mining sector. Fund managers are expected to show more support for a modest premium deal.

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Publication:Times of Oman (Muscat, Oman)
Date:Feb 8, 2012
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