The agreed-upon change that led to Xstrata's offer had to do with the retention packages offered to Xstrata executives. The original deal called for a retention package worth about $240 million and installed Xstrata's chief executive as the CEO of the combined company. The final offer changed the terms, but shareholder approval was required for both the retention package and the acquisition if the deal was going to go through. Under the today's agreement, a vote on the retention package will be conducted separately from a vote on the acquisition.
The financial terms of the retention package are essentially the same as in the original offer, except that Xstrata CEO Mick Davis will not receive his $47 million deal because he will be retained as CEO of the combined company for only six months before being replaced by Glencore's CEO. Davis's retention bonus has been cut by approximately two-thirds.
The other issue was board seats. Xstrata will place six directors on the combined company's board and Glencore will place five. Davis will have a seat on the combined company's board until he leaves the company, and he will be replaced by another Xstrata executive at that time.
Glencore already owns 34% of Xstrata and will be allowed to vote the shares under the terms of the final offer. There are still some Xstrata shareholders opposing the retention package, and it is not known whether or not Qatar Holdings, Xstrata's second-largest shareholder, will vote in favor of even the acquisition, much less the retention package. If the deal is finally approved by shareholders, the combined company will have a value of around $70 billion.
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