EC to rule on Glencore/Xstrata deal
Commission to give answer within 25 days
By CFOWorld.co.uk | CFO UK | Published 11:01, 24 February 12
The European Commission will decide within 25 days whether to approve Glencore's merger with the Xstrata mining group.
The two parties said they will notify the EC of the proposed £57 billion deal. Once the notification is acknowledged, the EC will have 25 days to decide whether to approve, reject or being a probe into the deal, which would create the world's fourth-largest natural resource company.
The Commission has in the past considered the two parties as a single entity, because Glencore already owns 34 percent of Xstrata. This is enough to exercise control from a competition perspective and could in principle negate the need for a merger filing.
However, the EC told the companies on Thursday that they would have to file official notification of the merger, implying it would consider the two as separate entities.
Glencore and Xstrata said in a statement they would notify the Commission under EU merger regulations.
"The parties expect the merger between Glencore and Xstrata not to result in any negative impact on competition in the commodity markets in which the two companies operate," the two sides said in a statement.
"In fact, the merged firm is expected to be able to offer customers a wider range of products and services and provide improved security of supply to satisfy customer demand."
The office of competition commissioner Joaquin Almunia declined to comment.
"We yet have to be notified officially of this operation. Until this is the case, we won't make any comment".
The deal is not expected to face major antitrust issues, but the sheer number of authorities it needs to negotiate with is likely to add to an already lengthy merger timetable.
Glencore and Xstrata combined become the world's largest thermal coal exporter, and the largest producer of both zinc and ferrochrome. But the picture is complex - in thermal coal, Glencore and Xstrata's export capacity is around 72 million tonnes, but that is less than 10 percent of the global total - well below the threshold deemed significant by most antitrust authorities.
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