Xstrata-Glencore merger backed by European Commission
- 22 November 2012
- From the section Business
The European Commission has given its backing to commodities giant Glencore's $31bn (£19.5bn) bid to take over mining firm Xstrata.
But as a condition, Glencore must scrap an exclusive deal with Nyrstar, the world's largest zinc metal producer, and sell its 7.8% stake in the firm.
Both Xstrata and Glencore shareholders have already voted overwhelmingly to merge the two companies.
The deal still requires regulatory approval in China and South Africa.
The Commission was concerned that the merged firm would have the ability and incentive to raise prices for zinc, an important raw material for many EU industries. The conditions address those fears.
The Commission vice-president in charge of competition policy, Joaquin Almunia, said: "The merger will bring together two major global players in key commodities.
"The proposed remedy ensures that competition in the European zinc metal market is preserved, so that European customers such as steel galvanisers and car makers can continue to produce valuable consumer goods at low prices and good quality."
The merger plan was first announced in February, when Glencore offered 2.8 shares for each Xstrata share. After months of negotiations, the offer was increased to 3.05 shares in September.
Glencore's chief executive, Ivan Glasenberg, will head the combined group.