Glencore mulling $84-billion merger with Xstrata: report

Glencore International AG, one of the world's largest privately held companies and among the largest suppliers of commodities and raw materials, is reported to be mulling a merger with diversified miner Xstrata, to create an $84-billion company.

The UK's Sunday Telegraph newspaper reported yesterday that advisers are working out a two-stage proposal to put to the Xstrata board that would see Glencore list on the London stock market through a reverse takeover.

Glencore holds 34.38 per cent stake in the Xstrata, estimated at approximately $18 billion.

Under the proposed merger, Glencore would have to reduce its stake in the enlarged group by placing shares to existing shareholders or bondholders, which would ensure Glencore's stake in the enlarged company not exceed 40 per cent – a stipulation that Xstrata is understood to have pressed for, said the paper.

Xstrata's chief executive, Mick Davis would be head of the combined companies, which had 2009 annual sales turnover of $176 billion.

Dealing in metals and minerals, crude oil and oil products, coal and agricultural products, Baar, Switzerland-based Glencore had assets worth $61.3 billion, a turnover of $152.2 billion for the fiscal year 2008 and valued at $35 billion under the terms of a bond issue last December.