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Fidelity joins chorus calling for improved Xstrata offer

US investment group Fidelity has backed investors urging Glencore (GLEN.L) to dig out more money in its bid for mining giant Xstrata (XTA.L).

Fidelity joins chorus calling for improved Xstrata offer

Glencore (GLEN.L) and Xstrata (XTA.L) are under increasing pressure to improve the terms of their proposed all-share merger, with Fidelity the latest investor to express dissatisfaction with the deal.

Fidelity, which owns 1.5% of Xstrata and 2.3% of Glencore, said in a statement reported by the Financial Times: 'We are supporting the deal in principle but think the terms need to be revised.'

Glencore is offering 2.8 of its shares for every Xstrata share. Analysts say raising the ratio to three may be enough to win shareholder support.

Standard Life and Schroders have already criticised the proposals to create a $90 billion (£57 billion) mining and commodity giant as undervaluing Xstrata. According to the FT, Royal London Asset Management is also a dissenter, which means shareholders owning 8% of the stock want the terms to be sweetened.

As Glencore already owns a third of Xstrata, a member of Citywire Top Stocks®, only 16% of shareholders are needed to block the vote to approve the deal.

Last week Ivan Glasenberg, Glencore's chief executive, flew to the Congo to secure the support of African leaders for the merger. It has fallen to Xstrata boss, Mick Davis, to sell the deal to the City.

Xstrata shares rose 2.5%, or 30p, to £12.28 in early morning trading, while Glencore gained 4.6% to 440p, helped by news from Greece as well as the prospect of an improved offer.

1 comment so far. Why not have your say?

Scott Goldie via mobile

Feb 13, 2012 at 20:16

Hi all, i have held 990 XTA shares through thick & thin since March 2009, when 371p. I was really hoping my holding to go to 2000p before selling, but im sure XTA sharehders and i will demand a higher premium to 8%. That is nowhere near what its worth. Id like a 12% premium at least!

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