Xstrata delays merger despite ACCC go ahead; draws CFMEU ire

Xstrata has delayed a shareholder vote on a merger with Glencore as investors continue to dictate the offer.

The international miner's AGM for the vote was scheduled for this coming Thursday; however it has now been postponed, according to the Sydney Morning Herald.

"Xstrata sought permission form the court to adjourn the meeting due to the proposed changes to the retention award element," the company said in a statement.

"As a consquence of these proposed changes [Xstrata has] to convene a new extraordinary general meeting."

The announcement came only a day after the Australian Competition and Consumer Commission approved that merger, saying it would not oppose the action, the Australian reported.

The merger had previously appeared to be moving ahead smoothly until Qatar Holdings, which holds more than 10% of the miner, held out for a better deal.

Glencore, which holds more than a third of Xstrata, was put forth a scrip offer of 2.8 Glencore shares for every Xstrata share.

Qatar rejected this proposal and is demanding an increased offer of 3.25 Glencore shares.

Sheikh Hamad bin Jassim al-Thani, the Qatari prime minister and head of Qatar Holdings, told Reuters that "I cannot talk about it because it's under negotiation now, but what I can say is our position is firm.

"We look after Xstrata and all the shareholders of Xstrata, and we think it's good to merge the two companies. It will be positive for both sides, but at the right price."

The backlash

Following the go ahead from the ACCC the CFMEU was quick to condemn the approvals.

"The ACCC has failed mining communities and workers in its approval of shadowy Swiss-based firm Glencore's takeover of coal giant Xstrata," it said.

It said the track record of the two miners had prompted grave fears.

"Xstrata and Glencore are already too powerful in global resources, especially given their poor track record," CFMEU general vice president Wayne McAndrew said.

"Further concentrating power in the hands of those known for their propensity to exploit workers and bully governments will only lead to further abuses."

The CFMEU was also quick to slam the executive pay deals, which totalled around US$ 375 million.

"Corporate watchdogs around the world – including the ACCC – should be considering the opposite of what these companies are proposing," he said.

"Regulators should break up these companies into smaller units so that their capcity to manipulate and abuse markets, governments, and workers is reduced."

The two initially declared an intention to merge in early February.

 

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