Bloomberg News

Glencore Extends Xstrata Takeover Deadline Amid China Talks

April 02, 2013

Glencore International Plc (GLEN), the largest publicly traded commodities supplier, pushed back the deadline to complete its $33 billion takeover of Xstrata Plc (XTA) for a fifth time because it’s yet to secure approval from China.

Talks with the nation’s regulator have been “constructive” and are in their final stages, Glencore said today in a statement. A decision isn’t expected before the planned April 16 deadline so the companies have agreed to extend the so-called long stop date for the acquisition to May 2.

Glencore Chief Executive Officer Ivan Glasenberg is seeking to buy Xstrata to create the world’s fourth-largest mining company by adding coal, copper, nickel and zinc operations to its cotton-to-crude-oil trading empire. Gaining Chinese endorsement is the final hurdle for a takeover that after 14 months has won approval in Europe, Australia and South Africa.

The combined company would be the world’s third-largest producer of mined copper, a metal used in pipes and wires. China’s Ministry of Commerce, or MOFCOM, is responsible for the decision to sign off on the takeover.

The “positive commentary from Glencore points to confidence in near-term deal success, and we remain of the view that the final hurdle of MOFCOM approval will be granted,” Ash Lazenby, an analyst at Liberum Capital Ltd., wrote in a note to clients.

Copper Market

The Chinese regulator had focused its review on the new company’s influence in the copper-concentrate market, Glasenberg said March 6. China named Gao Hucheng commerce minister on March 16 after the National People’s Congress approved his appointment as a once-a-decade power handover concluded.

Dentsu Inc. said March 26 that the nation’s regulator had cleared its 3.2 billion-pound ($5 billion) takeover of Aegis Group Plc. (AGS)

Glencore may have offered to sell Peruvian copper mines owned by Zug, Switzerland-based Xstrata amid other concessions to win Chinese approval, according to a March 31 report in the London-based Times. The mines may include the $5 billion Las Bambas and $1.5 billion Antapaccay projects, the newspaper said, without saying where it got the information.

A spokesman for Baar, Switzerland-based Glencore yesterday declined to comment on the report.

The delay follows previous extensions in March and January to allow for the completion of regulatory reviews.

Glencore announced the acquisition in February 2012 and raised its all-stock bid in September to win shareholder approval. The stock rose 0.7 percent to 358.5 pence at 10:08 a.m. in London trading. Xstrata advanced 1.1 percent to 1,079.5 pence.

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net


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