Glencore International, the world's largest publicly traded commodities supplier, says its merger offer to swap each share of Xstrata that it does not already own for 3.05 Glencore shares will not be raised further.
It also says Mick Davis, the current boss of Xstrata - a global metals miner - will become the chief executive of the combined group for up to only six months. After he steps down, he will be succeeded by Glencore chief executive Ivan Glasenberg.
Switzerland-based Glencore has a 34 per cent stake in Xstrata, also based in Switzerland. Last Friday, London and Hong Kong-listed Glencore sweetened its offer for Xstrata by 9 per cent by revising up its offer of 3.05 Glencore shares for each Xstrata share from 2.8.
Trading of Glencore shares was suspended in Hong Kong yesterday, pending an announcement about its offer terms. Trading will resume today.
Acceptance of the sweetened deal by Qatar Holdings, a sovereign investment vehicle, is key since it holds 12 per cent of Xstrata and had said it would not accept Glencore's pre-sweetened bid. Shareholders holding a combined 16.48 per cent stake in Xstrata can block the deal since British takeover rules prevent Glencore from voting on its 34 per cent Xstrata stake.
Qatar was demanding 3.25 Glencore shares for each Xstrata share it holds.
Glasenberg, a billionaire former coal trader who owns 16 per cent of Glencore, had said it would aggressively seek mergers and acquisitions.
A successful merger would reunite the two firms, which have similar market capitalisation and were split a decade ago when Xstrata bought Glencore's Australian and South African assets for US$2.5 billion and went public in London.
Glencore, which was listed in May last year, markets much of Xstrata's coal production. It yesterday said its merger offer for Xstrata was subject to the condition that independent Xstrata shareholders approve a management incentive scheme.
Xstrata last May offered 73 of its executive directors and senior employees a total of up to £170 million (HK$2.1 billion) in cash as post-merger retention awards. After seeking shareholders' feedback, the offer was subsequently changed to an all-shares reward, and subject to the meeting of various cost reduction objectives.
In response to Glencore's announcement yesterday, Xstrata said its independent non-executive directors "will consider carefully the proposal received and consult with major shareholders before responding".