Glencore wins conditional EU clearance for Xstrata deal
UPDATED @ 10:16:24 PM 22-11-2012
BRUSSELS, Nov 22 – Glencore closed in on its aim of becoming a mining and trading powerhouse on today, as Europe’s antitrust regulator announced it had approved the US$33 billion (RM101 billion) takeover of Xstrata.
The deal, one of the biggest to date in the mining sector, was cleared with more modest concessions than had been expected.
The world’s largest diversified commodities trader must scrap an exclusive zinc sales deal with Nyrstar and sell its 7.8 per cent stake in the world No. 1 zinc producer, the European Commission said in a statement.
The move will cut the combined entity’s share of the European zinc market to below 40 per cent, the threshold which typically triggers antitrust regulatory concerns.
“The proposed remedy ensures that competition in the European zinc metal market is preserved, so that European customers such as steel galvanisers and carmakers can continue to produce valuable consumer goods at low prices and good quality,” EU Competition Commissioner Joaquin Almunia said.
The EU antitrust authority said Glencore also pledged not to buy zinc, either directly or indirectly, from Nyrstar for 10 years, and agreed not to take any action to restrict Nyrstar’s ability to compete with it in Europe during that period.
Such guarantees meant Glencore will not have to sell Xstrata’s Nordenham zinc smelter in Germany. It offered up the smelter last week after the Commission said the Nyrstar proposal was not sufficient, sources familiar with the matter said.
“We are somewhat surprised by the leniency of the EC, but not at all surprised that this transaction has ultimately been approved by Brussels,” Jefferies analysts said in a note.
“Today’s EU approval brings this proposed merger one step closer to completion.”
Glencore must now clear antitrust hurdles in China, and secure a final approval from South African authorities.
Investors gave their backing to the deal earlier this week. – Reuters