Glencore, Xstrata merger gets EU approval
Brussels, Belgium (4E) – The planned $31bn takeover bid by commodities giant Glencore and mining firm Xstrata has received the nod of the European Commission.
The EU gave the green light for the Glencore and Xstrata alliance provided that the new company will sell its stake and cancel a deal to sell zinc by Belgian company and world’s largest zinc producer Nyrstar NV. Despite earlier speculation, Glencore was not forced to sell off any of its European smelters.
Shareholders from both Glencore and Xstrata have overwhelmingly supported the deal merging the two companies.
The next challenge for the combined company is to hurdle antitrust regulators in China, in which a ruling is expected by the end of the year. Both companies, which are already selling minerals there, need to obtain clearance from the Chinese government if it hopes to expand its market share in the world’s second biggest economy.
Since the new company is not expected to operate mines and smelters in China, analysts believe that it will be easier to get approval from authorities.
In February, Glencore announced that it was offering 2.8 shares for every Xstrata share, which eventually reached 3.05 shares in September after months of negotiations.
The new company’s market capitalization will reach $70bn and poised to become the the world’s biggest exporter of thermal-coal, producer of ferrochrome and miner of zinc. It is also expected to become the world’s biggest miner of copper by the end of the decade.