M&A Mega Deal: Xstrata and Glencore


February 16, 2012

News agencies and corporate finance publications are generating a lot of “ink” covering the mega-merger between mining and commodities trading companies Glencore and Xstrata.  One news outlet calls it a “bankers bonanza” due to the large fees involved, estimated to be USD 140 million, while Investment Week speculates that this may be the first of many such large-sized transactions in mining. A good overview on what has happened so far is found in Reuters a video broadcast.


It reports that Glencore, which already owned one third of Xstrata, aims to buy the remaining two thirds of Xstrata for USD41 billion. The new deal will be the “biggest merger deal in the mining sector” ever according to the report. There is a discussion on the advantages to each company, Glencore gets more mining assets, which means it can theoretically simplify trading, while Xstrata, which already uses Glencore as a marketing outlet for its minerals, and how it can solidify that relationship.


The report also discusses the fact that certain shareholders oppose the merger and anti-trust regulators may put hurdles in the way of the mega-deal.

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