Commodities titan Glencore International (GLEN.LN) is willing to walk away from its proposed merger of equals with Xstrata PLC (XTA.LN) as it continues to wrangle with some of Xstrata's largest shareholders about what is the right value for the deal.
Commodities titan Glencore International (GLEN.LN) is willing to walk
away from its proposed merger of equals with Xstrata PLC (XTA.LN) as it
continues to wrangle with some of Xstrata's largest shareholders about what is
the right value for the deal.
"It's not a must-do deal," Glencore's Chief Executive Ivan Glasenberg
told Dow Jones Newswires in a call. "If we don't do it now, we can do it
in the future," he added. Mr. Glasenberg, Glencore's largest shareholder,
has been championing a merger with the global diversified miner Xstrata for
five years. The deal, if completed, would create the world's fourth largest
diversified miner with a market capitalization of about $66 billion.
The deal, however, is in danger of collapsing after sovereign wealth fund,
Qatar Holding LLC, Xstrata's second largest shareholder after Glencore with an
11.8% stake, surprised market participants in June by calling on Glencore to
raise its offer to 3.25 Glencore shares for every Xstrata share, up from the
current 2.8 level.
Mr. Glasenberg said he couldn't understand how the Qataris or any other
shareholder could argue with the 2.8 share swap ratio. "I've seen nothing
from any investors or shareholders....No one has given me any substantive
figures" that would back the 3.25 ratio, he said. He added that even
Xstrata's board of directors, which recommended the offer, recognizes that 2.8
is a good deal.
Qatar Holding, alongside another five shareholders who also believe the current
share swap ratio isn't attractive enough, own a combined 15.8% of Xstrata's
shares. Under the terms of the merger proposal, just over 16% of Xstrata's
shareholder base need to vote against the deal on Sept. 7 in order to block it.
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