Zug, 20 November 2012At shareholder meetings held today in Zug, Switzerland, Xstrata’s shareholders other than the Glencore Group approved the proposed all-share merger of Xstrata plc and Glencore International plc, subject to the resolution to approve the Revised Management Incentive Arrangements to be put to the Further Xstrata General Meeting not being passed. This resolution was subsequently not passed. Consequently, the merger will proceed, subject to outstanding regulatory approvals and UK Court approval, but the Revised Management Incentive Arrangements will not be put in place to retain key Xstrata operational and functional management.
Sir John Bond, Xstrata plc Chairman, commented:
“We welcome shareholders’ support for the merger with Glencore today, which underlines the sound strategic rationale for a combination of the two companies. It is our judgement that retention arrangements served the interests of shareholders by mitigating the risk of losing the management team that built Xstrata and who would be fundamental to the group’s future success. Xstrata’s board put in place a scheme of arrangement and voting structure that empowered non-Glencore shareholders to determine how and whether the merger would proceed and today, our shareholders have voted to approve the Merger without supporting the retention arrangements.
”The immediate focus of Xstrata’s board and management team is on the successful completion of the Merger and we remain committed to delivering the outcome that shareholders have approved today. I have said consistently that I would do what is in the best interests of the company. In the light of shareholders’ decision not to support the board’s recommendation, I have informed the Xstrata plc board and Glencore’s current chairman that, once the Merger has completed, I intend to instruct the board to commence an orderly process to appoint a new independent Chairman of Glencore Xstrata plc. Upon the satisfactory conclusion of the search process, overseen by the Glencore Xstrata plc board nominations committee, I will step down.”
Mick Davis, Xstrata plc Chief Executive Officer, said:
“I have been privileged to lead a team of exceptionally talented and capable managers over the past ten years. Together we have created one of the world’s leading mining groups from inauspicious beginnings and delivered enormous value to all of our shareholders, including Glencore. The corporate culture, values and world-class portfolio of assets and growth projects we have developed over that time are a source of pride and will make a significant contribution to the combined company.
“Glencore Xstrata has the potential to become a very significant company in the resources world and Xstrata’s people will be a critical element of this success. I regret the decision of shareholders not to approve these retention arrangements for the members of my senior and operational management deemed crucial to the success of the combined group as, in my view, this introduces unnecessary risks to the merged company’s future value proposition.
“Shareholders, however, have spoken clearly and we respect their views. I would like to thank my senior team for the professionalism they have shown over the past ten years in running our operations and delivering our major growth projects as efficiently and safely as possible.“
Merger control approvals have been obtained from the majority of relevant antitrust and regulatory authorities. Only three approvals remain outstanding – those of the EU, China and South Africa. The European Commission Phase I review process will terminate on 22 November 2012. As previously indicated, at the end of the Phase I period, the European Commission may (a) approve the Merger unconditionally, (b) approve the Merger subject to commitments in relation to the Combined Group offered by Glencore and accepted by the European Commission, or (c) conclude that it has serious doubts as to the Merger’s compatibility with the common market and therefore refer the case to an in-depth Phase II review. The Merger will lapse if Glencore invokes the relevant condition as a result of either the merger or any matter arising from it being referred by the European Commission to a Phase II investigation, or as a result of the Merger being approved by the European Commission on terms (including as to remedies) which are not reasonably satisfactory to Glencore.