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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).
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.
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by Chris Marshall on Dec 09, 2013 at 09:48