LONDON - One of the world’s largest deals in recent years has finally reached the finishing line.
Glencore International, the Swiss commodities trader, announced on Thursday that its merger with the mining giant Xstrata was complete and that shares in the newly combined company, called Glencore Xstrata, will start trading in London on Friday. The combined company’s market value is about 43 billion pounds ($66 billion).
The announcement comes more than a year after Glencore first unveiled its plans to buy Xstrata for about $30 billion in an all-share deal.
The takeover is one of the few bright spots in Europe’s moribund mergers and acquisitions market, as both companies and their shareholders have been gripped by a series of well-publicized arguments over how the takeover should proceed.
A shareholder revolt forced Glencore to increase its offer to 3.05 of its own shares for each Xstrata share from its initial 2.8-share proposal. The commodity trader’s chief executive, Ivan Glasenberg, outmuscled his counterpart at Xstrata, Mick Davis, to lead the combined company. And antitrust authorities in Europe and China forced the companies to divest a number of assets before approving the deal.
“Ivan Glasenberg again lived up to his reputation as a shrewd deal maker,†said Paul Gait, a mining analyst at Sanford Bernstein in London.
The deal for Xstrata also brought welcome relief for some of the world’s largest banks, which collectively earned about $114 million in fees to shepherd the deal to completion, according to the data provider Thomson Reuters.
It also marks the reversal of a decision in 2002 to split the two companies when Xstrata became a separate entity through an initial public offering. While Glencore already owned a 34 percent stake in the miner, the merged company will now become one of the world’s largest commodities firms and compete against rivals like BHP Billiton and Vale of Brazil.
“The company has a unique business model to capture value in a changing commodity environment,†Myles Allsop, a UBS analyst, told investors in a research note.
By combining Glencore’s existing trading business with Xstrata’s mining operations, the joint company will have a diversified business spread across several commodities, including copper, coal and zinc.
While a slowdown in emerging economies like China and India has dampened short-term demand for these metals, analysts expect the market to rebound over the next three years as governments increase spending to bolster local growth.
Investors had long expected a deal between Glencore and Xstrata since the commodities trader raised $10 billion in its I.P.O. in 2011. Some shareholders, however, initially balked at how the takeover was structured. The Middle Eastern sovereign wealth fund Qatar Holding, which owned a 12 percent stake in Xstrata, was a vocal critic and demanded that Glencore improve its all-share bid.
Glencore eventually relented but called for its chief executive, Mr. Glasenberg, to become head of the merged company earlier than initially had been planned.
In the latest twist in the takeover, Mr. Davis of Xstrata - nicknamed Mick the Miner - announced last month that he would step down when the deal was completed. As part of his compensation package, he
is expected to receive a payout of about $20 million as well as 30 hours use of the mining company’s private jet.
Executive pay had already been a stumbling block for the deal.
In November, Xstrata shareholders blocked attempts to hand out bonuses worth a combined $220 million that were aimed at retaining about 70 of the mining company’s top executives.
“We, as major shareholders in Xstrata, have no confidence in the independence and robustness of the current Xstrata board,†David Trenchard, vice chairman of Knight Vinke, which voted against the payouts, said in a statement at the time.
Attention will now turn to the future of Glencore Xstrata. The company, which will hold an investor presentation on Friday, has already outlined yearly savings of about $500 million.
Analysts also expect further asset disposals so that the company can focus on its existing operations, though some question whether other mining companies will be prepared to buy the projects because of the continuing uncertainty in the global commodity markets.
“It’s a challenging market,†said Ash Lazenby, a mining analyst at Liberum Capital in London. “It will be difficult because no one wants to buy assets.â€
Further deals also could be in the works.
Last year, Glencore spent about $10 billion on acquisitions, excluding its all-share deal for Xstrata. That included the $6.2 billion purchase of the Canadian grain handler Viterra despite concerns about commodity prices.
Analysts expect Mr. Glasenberg, who holds an 8 percent stake in Glencore Xstrata, to continue picking up
assets that complement the company’s existing metals operations, as well potentially bigger deals for rivals like Anglo American, the world’s largest platinum producer.
“With access to equity markets, we expect Glencore to target larger opportunities, as well as small- and midsize opportunities on which the company was built,†said Mr. Allsop of UBS.
Deutsche Bank, Goldman Sachs, JPMorgan Chase and Nomura Bank advised Xstrata on the deal, while Citigroup and Morgan Stanley advised Glencore. Lazard advised Qatar Holding.
