Under its new offer, Glencore will provide Xstrata shareholders with 3.05 Glencore shares in exchange for each Xstrata share. It’s prior proposal would have offered 2.8 Glencore shares for each Xstrata share. The deal would create a mining giant with a $70 billion market capitalization, the Wall Street Journal noted.
In addition to the new share exchange ratio, Glencore’s latest offer alters the proposed management structure of the combined company. Xstrata CEO Mick Davis will no longer head the new company; Glencore’s CEO Ivan Glasenberg will now take charge, if the merger goes through.
Shares of Xstrata jumped more than 6%, while Glencore shares fell more than 3%, in over-the-counter trading in New York on Friday morning.
Xstrata officials said they hadn’t received “sufficient information” regarding the new offer and warned that the company might lose key executives if Davis is replaced.
While Glencore had previously described the deal as a merger of equals, the higher share ratio and new managment structure indicates that the company is now pursuing Xstrata as an acquisition.
No response has yet been received from Qatar Holdings, one of Xstrata’s stakeholders, which opposed the original deal to the new proposal. However, Standard Life Investments, a shareholder in both companies, has indicated support for the new terms.