Xstrata has formally released its plans to merge with Glencore International, one of the world's leading commodity producers and marketers.

If the two Swiss-based companies were to merge, they would have a combined value of $90 billion. Glencore already owns part of Xstrata.

In Sudbury, Xstrata operates Nickel Rim Mine, Fraser Mine, a mill and a smelter.
The company would be led by current Xstrata CEO Mick Davis, as CEO of the combined group, Ivan Glasenberg, current Glencore CEO, as deputy CEO and president, Trevor Reid, current Xstrata CFO, as CFO, and Steven Kalmin, current Glencore CFO, as deputy CFO.

In a statement, Xstrata and Glencore called the move a “merger of equals.”

“A merger between Glencore and Xstrata offers a unique opportunity to create a new business model in our industry to respond to a changing environment,” Davis said, in a press release.

“It is the next logical step for two complementary businesses, each with an outstanding track record of shareholder value creation, entrepreneurial management and a proven ability to spot valuable opportunities and capitalize on them.”
However, at least two top 10 Xstrata shareholders say they'll vote against the deal, according to media reports.

Standard Life Investments and Schroders say the deal undervalues their shares.
“I'm in complete agreement with Standard Life and we intend to do exactly the same,” Schroders' Richard Buxton reportedly told Reuters.

“This is a fabulous deal for Glencore. It's probably a great deal for the Xstrata management, but it's a poor deal for Xstrata's majority shareholders.”

Posted by Arron Pickard