8/9/2019 Glencore-Xstrata Deal Th...Ex Voting Process - WSJ
2/3
J In-Depth
e votes: first, on a deal that includes the retention payments;
second, on one that
sn't; and third, on the retention payments themselves.
the deal to pass, there has to be harmony between one of the
first two votes and
third. If, for example, only the first resolution passes
(approval with retention
ments), then the retention payments also must pass for the deal
to go through.
ing to the difficulty is that the first two votes are subject to
approval by 75% of the
rata shares that Glencore doesn't already own. The threshold on
the third
olution is 50%. Glencore already holds a 34% stake in
Xstrata.
ch of the nervousness of those involved with the deal centers on
a scenario in
ch the first resolution passes, and the second and the third are
rejected, whichuld kill the deal.
eral factors make that a plausible scenario.
rata's board is recommending that shareholders vote "yes" on the
first resolution,
" on the second and "yes" on the retention payments. The board
has said the
ntion payments are essential to the deal's long-term success
since Xstrata's
ing assets would account for the overwhelming majority of the
combined
mpany's earnings.
ar Holding LLC, Xstrata's second-largest shareholder, after
Glencore, indicated
it would take its cue from Xstrata's board but hasn't been
explicit about how it
uld vote. The sovereign-wealth fund owns about 12% of Xstrata
and had agitatedcessfully for a higher price.
other shareholders are expected to vote against the third
measure. Many of them
or a deal but disapprove of the retention payments.
ckRockInc., which holds nearly a 3% stake in Xstrata, is
expected to vote "no" on
third measure. While fund managers at the firm support the deal,
it was unclear
w BlackRock would vote on the first two resolutions.
er shareholders could be swayed to vote like BlackRock on the
payments.
isory firm Institutional Shareholder Services has recommended
that shareholders
e against the third measure even as it recommended voting for
the first two.
ncore markets and distributes a range of commodities, while
Xstrata mines coal,
c and other products. Putting the two companies together would
create a vertically
grated powerhouse in the industry. Acquiring the Xstrata shares
that Glencore
sn't already own would cost roughly 20.5 billion based on
today's share price.
e thing that deal proponents have going for them is that
investors who attend
reholder gatherings in London or Zug, Switzerland, will be able
to change their
es on the pay plan after seeing the results of the first two
votes.
lex MacDonald in London contributed to this article.
te to Dana Cimilluca at [email protected]
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