Glencore’s warning to Xstrata
21 Aug, 2012
Xstrata’s proposed merger with commodities giant Glencore could be in danger after demands by an Xstrata shareholder for improved terms have been rejected by Glencore’s chief executive.
Qatar Holding was told by Ivan Glasenberg that Glencore could back out of the merger as it is ‘not a must do deal’.
The planned transaction will require Xstrata investors to replace their shares with 2.8 Glencore shares, a ratio that Qatar Holdings is demanding should be upped to 3.25.
According to the BBC, Glasenberg said: “We cannot understand the position of the Qataris, asking for more than the 2.8 ratio. We have seen nothing coming out of recent results that supports this, in fact we have seen quite the opposite.”
He added: “It is not a must-do deal. It is a deal that we believe makes sense… but if shareholders have another opinion it is their choice.”
The ‘merger of equals’ between Glencore and Xstrata was confirmed back in February. When and if the commodities giant and the mining heavy weight do join forces, they would create a firm worth around $80 billion.
At the time it was announced, the merger was described as ‘broadly positive for Glencore’s shareholders’ by Charles Cooper, an analyst at Oriel Securities, with Glasenberg claiming that the new firm would be ‘a new powerhouse in the global commodities business’, according to the BBC.
The deal will be voted on by Xstrata shareholders in early September.