Commodities trading giant Glencore International has presented its final offer for mining giant Xstrata and it is substantially the same as the preliminary offer Glencore made on Friday, just before Xstrata shareholders were to vote on the initial offer.

Glencore has raised its offer from 2.8 shares of Glencore stock for each share of Xstrata to 3.05 shares and says, “[Glencore] will not increase the merger ratio further.” Glencore said that the new offer represents a 34% premium to the last price for Xstrata shares before news of the proposed deal became public. Under U.K. law, if the new deal is rejected, Glencore is unlikely to be able to raise it again.

Glencore also changed its Friday offer in relation to corporate governance. Now the company says it will offer Xstrata CEO Mick Davis the position of interim CEO of the combined company for a period of six months, after which Glencore CEO Ivan Glasenberg will become CEO. The original deal had Davis as the permanent CEO.

Finally, the deal could be switched from a merger to a takeover by Glencore, with the approval of the offer by Xstrata shareholders. If that happens, the final offer would need approval by only a simple majority of Xstrata shareholders instead of the 75% required by the original deal. Glencore, which cannot vote its 34% of Xstrata shares under the original deal, would be able to vote its shares if the offer is switched to a takeover.

For its part, Xstrata’s board has said it will consider the new terms and make a decision by September 24.

Glencore has said all along that it will not overpay for Xstrata, but if the trading company cannot make this deal happen now, chances are will be finished forever. Xstrata certainly will be worth more by the end of this month. The only question is which company will get to take advantage of that increased value.

Paul Ausick

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