Glencore, Xstrata Tie-up Getting Pushback (GLNCY, XSRAY)

The proposed merger between Glencore International Inc. (OTC: GLNCY) and Xstrata plc (OTC: XSRAY) would create a trading and mining giant valued at about $90 billion. But at least two Xstrata shareholders don’t think that’s a good deal.

Standard Life, Xstrata’s fifth-largest shareholder with about 2% ownership, and Schroder’s, with about 0.6% ownership, intend to vote against the deal, as a Schroder’s spokesman says:

I’m in complete agreement with Standard Life and we intend to do exactly the same. This is a fabulous deal for Glencore, it’s probably a great deal for the Xstrata management, but it’s a poor deal for Xstrata’s majority shareholders.

Xstrata shareholders would receive 2.8 shares of Glencore stock for every share of Xstrata they own. That’s a premium of about 15% over Xstrata’s closing price on February 1st.

Under the terms of the merger, Glencore cannot vote its 34% of Xstrata, and at least 75% of the remaining shares must be voted in favor of the merger. Just less than 17% of shares voting ‘no’ can squash the deal.