Glencore-Xstrata Merger to create the world’s fourth largest diversified miner with a market capitalization of nearly $70 billion

Glencore, the world’s largest commodities trading company, and diversified miner Xstrata announced plans to merge their operations in February in a move that would create the world’s fourth largest diversified miner with a market capitalization of nearly $70 billion.

Glencore International PLC’s (GLEN.LN) multi-billion dollar merger with Xstrata PLC (XTA.LN) reached another milestone late Monday after the South African Competition Commission gave the go-ahead for the deal to close.

The South African Competition Commission reviewed both companies’ thermal coal operations in South Africa and “concluded that the transaction is not likely to lead to a substantial prevention or lessening of competition.” It was, however, concerned about a potential 180 South African job losses that might result from the merger of the two companies.

The commission secured assurances from Glencore that only up to 80 specialist or managerial jobs would be lost while the jobs of another 100 low-skilled workers would be preserved for a period of up to two years after the merger. After a period of two years, the combined entity would be able to dismiss the workers but would have to provide a training fund equivalent to 10,000 rand ($1,158) per affected worker.

Glencore now needs to secure regulatory approval from the European Union and China before the deal can go ahead. The deal must also secure approval from both Glencore and Xstrata’s shareholders. A date hasn’t been set yet, but people familiar with the matter expect the deal to be put to a vote sometime in November.


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