The Rising Influence of Rising Affluence

[DewDiligence]

Glencore acquires Xstrata for $57B in stock, creating world’s fourth-largest mining company:

http://online.wsj.com/article/SB10001424052970204136404577208273480172652.html

The new company, to be called Glencore Xstrata International PLC, could dramatically change the face of the natural-resource industry. It would for the first time marry a major mining operation with a big trader of everything from metals to oil and grains, and generate more than $200 billion in annual sales from operations in five continents.

… Glencore and Xstrata billed the deal as a merger of equals, even though Xstrata investors are to receive 2.8 Glencore shares for every share they own, reflecting a premium of 8% over Xstrata's share price before the potential deal surfaced last week and 15% taking into account a rise in Glencore shares since then. The deal will give Xstrata shareholders other than Glencore, which already has a 34.4% stake in the miner, a 45% stake in the combined group, which would be the world's fourth-largest miner. [The three larger companies in terms of mining revenue per se are are BHP, RIO, and VALE.]

The merger needs the customary shareholder and regulatory approvals. There’s a whopping $472M breakup fee payable by Glencore.