Glencore International Plc (GLEN), the largest publicly traded commodities supplier, won’t complete its $33 billion takeover of Xstrata Plc (XTA) two weeks from today as planned as it awaits a ruling from China on the deal.
“Given the ongoing regulatory process and the Xstrata court timetable, it will not now be possible to complete by March 15,” Glencore said in a statement. The Baar, Switzerland- based company didn’t give a new date, saying it would provide an update on timing when it reports full-year earnings on March 5.
Glencore made its all-share bid for Xstrata in February 2012 and won investor approval for the deal in September. It’s the third time the trader has pushed back the deadline to complete a takeover that adds coal, nickel, copper and zinc mines to create the world’s fourth-largest mining company. Approval from China is the final hurdle to completing the acquisition.
Glencore and coal producer Xstrata in January extended the deadline to mid-March to allow for regulatory reviews in South Africa and China. South Africa’s antitrust tribunal subsequently cleared the deal after a Nov. 22 approval by the European Union.
China hasn’t any reason to reject the deal after regulators elsewhere backed it, and the transaction doesn’t involve any major business interest for the country, two Beijing-based officials said in January, asking to not be identified because they weren’t authorized to speak to the media.
Glencore fell 4 percent to 371.95 pence by 12:17 p.m. in London, the biggest intraday decline since Sept. 7, while Xstrata dropped 4.3 percent to 1,112 pence, also the most since September. The FTSE 350 Mining Index was 2.8 percent lower.
China’s Ministry of Commerce, or MOFCOM, is responsible for the decision. Glencore’s C$6.1 billion ($5.9 billion) takeover of Canada’s Viterra Inc., completed in December, was delayed as it awaited clearance under Chinese anti-monopoly law. Glencore gained approval that month after extending the deadline at least twice.
The ruling Communist Party’s omission of Commerce Minister Chen Deming from its new central committee announced in November was a signal that he may be stepping down from the post.
The government is expected to appoint new ministers at legislative meetings that open March 5 in Beijing. Xi Jinping, who was named head of the Communist Party and the military in November, is set to be appointed president at the same meetings.
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