May 30, 2012 / 11:13 PM / 5 years ago

Glencore, Xstrata eye last stretch in marathon deal

LONDON (Reuters) - Commodities trader Glencore (GLEN.L) and miner Xstrata XTA.L will send details of their long-awaited tie-up to shareholders on Thursday, including a three-year retention package set to be worth tens of millions of dollars for Xstrata boss Mick Davis.

Xstrata’s Davis - who will stay on as chief executive of the combined group, with Glencore’s Ivan Glasenberg as deputy chief executive - will forgo a “change of control” payment that would have been triggered by the $30 billion takeover. But he is expected to be handed a hefty shares package to ensure he stays on after the bumper all-share deal.

Davis’ steady hand at the helm is seen as a positive by Xstrata shareholders who have fretted over Glencore’s corporate governance, but the size of his retention payment will be in focus on Thursday, after more than a third of voting shareholders rejected pay plans at Xstrata’s annual shareholder meeting earlier this month.

Davis, who has led Xstrata for over a decade, is one of the best-paid executives in the FTSE 100, taking home $5.4 million pounds last year in salary, cash bonus and benefits - excluding long-term incentives, deferred bonuses and retirement benefits that could more than triple that if he hits set targets.

Glencore, which already owns almost 34 percent of the miner, is offering 2.8 new shares for every Xstrata share held to conclude its long-standing plan to create an integrated mining and trading powerhouse. At current prices that values the takeover bid at just under $30 billion.

Those terms are likely to be confirmed in Xstrata’s circular for shareholders and Glencore’s prospectus for the issue of new shares, which both sides had said would be published by the end of May. The commodities trader can still, however, increase the bid up until just days before shareholders vote.

Investors will also be looking through documents for details including an update on negotiations with antitrust authorities and the date of shareholder votes, expected in early July.

The reams of paperwork will also detail the cost of counsel provided by teams of bankers and lawyers that have advised on the deal - one of few blockbuster mergers in a fallow period for the industry.

Glencore is being advised by Citigroup, Morgan Stanley, Credit Suisse and BNP Paribas. Xstrata is being advised by Deutsche Bank, JP Morgan, Goldman Sachs, Nomura and Barclays Capital. Former Citi banker Michael Klein was an independent consultant to both sides.

($1=0.6378 British pounds)

Reporting by Clara Ferreira-Marques; Additional reporting by Victoria Howley; Editing by Mike Nesbit

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