Qatar Holding LLC has Agreed to Glencore's Takeover of Xstrata

Glencore International Plc’s $31 billion takeover bid for Xstrata Plc has now been supported by Qatar Holding LLC, in a move that almost guarantees the success of the bid. Qatar Holding LLC is the second largest shareholder in Xstrata, and has accepted Glencore’s offer of 3.05 shares for ever Xstrata share. Glencore raised its initial offer by 8.9% in September after the Qatari sovereign wealth fund rejected it as too cheap.

Alain William, an analyst at Societe Generale SA, explained that this new vote of support in the takeover means “the deal has greater chance to succeed as Qatar is pivotal in the voting process.”

If successful the deal will add Xstrata’s coal, nickel, zinc, and copper mining operations to Glencore’s commodity trading empire. The resultant company will control about ten percent of all seaborne exports of coal, and three percent of global oil traded.

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The completion of the takeover is still waiting for approval from several regulators, but both companies expect everything to be completed by the end of the year. Peter Davey, an analyst at SBG Securities, said: “I see about 90 percent probability of the deal being voted through. Given that one potential deal breaker -- the link between the retention vote and the merger vote -- is lifted, I would put a high probability of it going through.”

By. Joao Peixe of Oilprice.com