LONDON (AP) ? The board of Anglo-Swiss mining company Xstrata PLC said Monday it is recommending shareholders accept a merger deal with Swiss commodities trader Glencore PLC.
Xstrata said in a statement that it was supporting the offer of 3.05 shares in the new firm for each Xstrata share. The deal values Xstrata at 31.9 billion pounds ($51.5 billion) on the shares' closing price Friday. Glencore has a market capitalization of 23.5 billion pounds, according to data provider FactSet.
Xstrata is the world's biggest exporter of thermal coal and also produces copper, nickel and zinc. If the deal is approved by shareholders, the merged company would be one of the world's largest natural resources firms.
Glencore's attempt to get hold of Xstrata has developed into a long-running saga. Previous offers were resisted by Xstrata shareholders, including major stakeholder Qatar Holding. But Glencore improved its original offer of 2.8 shares last month.
The deal would see Xstrata chief executive Mick Davis remain as CEO of the new company for six months, then be succeeded by Glencore CEO Ivan Glasenberg.
Xstrata said it had agreed to give shareholders a separate vote on bonuses for senior executives, a key sticking point to a deal. While Xstrata recommended that shareholders also vote in favor of the bonus scheme, the merger's approval will not depend on it.
Davis said the strategic rationale behind a merger was "highly compelling."
"A merger will fuse the respective strengths of the two companies into a unique, vertically integrated natural resources group," he said.
Xstrata shares were up 1.6 percent at 973.1 pence in early trading on the London Stock Exchange. Glencore shares were down 1 percent at 339.6 pence.
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