Glencore and Xstrata seal merger but not all shareholders happy

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Glencore International has agreed to buy Xstrata for $38 billion to create one of the world’s largest resources companies.

As expected, Glencore offered 2.8 shares for each Xstrata share, a 17 per cent premium on Xstrata’s price.

Xstrata CEO Mick Davis will be the new CEO of the company, with Glencore CEO Ivan Glasenberg the largest shareholder, deputy CEO, and president.

The combined business will make $US209 billion in sales, and will be a serious competitor to BHP Billiton, Rio Tinto, and Vale.

It will combine Glencore’s global trading in energy, metals, and agriculture with Xstrata’s coal, copper, and zinc operations.

The Xstrata and Glencore CEOs Davis and Glasenberg were the two drivers behind the merger, and have known each other since their university days.

Not all of Xstrata’s major shareholders have been happy with the deal, and have eyed the personal connections between Davis and Glasenberg with suspicion.

An unnamed top five shareholder told the UK Telegraph Davis should be "very careful" about striking the deal which he "personally benefits from".

According to the Guardian Davis could cash in as much as £6 million from the merger.

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