Five things to consider ahead of Glencore Xstrata merger vote

Glencore’s first-half results were overshadowed by one question: will the trading company and producer sweeten its bid for Xstrata?

(The answer, by the way, appeared to be a resounding “no”.)

Here are five things to bear in mind ahead of the vote by Xstrata shareholders on September 7.

1) Qatar Holding, the second largest shareholder in Xstrata after Glencore, has never said in public it will vote against the merger if the share ratio is not increased (its statement back in June was carefully worded to avoid saying that);

2) Ivan Glasenberg is adamant he will stick to the ratio originally mooted when the proposed merger was first announced in February on the basis that the price is fair, on the basis of the opportunities the two companies will be able to realise in combination;

3) Other major shareholders in Xstrata, including Standard Life, have been relatively quiet since voicing concerns over both the share ratio and the miner’s remuneration package, which has now been amended;

4) Xstrata’s earnings fell by 31% in the first-half, Glencore’s by 17%, bolstering Glasenberg’s claim that 2.8 of Glencore’s shares for every Xstrata share is generous;

5) As of Tuesday August 21, based on prices for both companies on the London Stock Exchange, the ratio stood at about 2.6 Glencore shares for every Xstrata share.