On the day the Dow is expected to open at a record high, the hottest M&A story of the year — Glencore and Xstrata — brings us the following.
First the collective news (via the FT): Read more
We are talking here about Glenstrata, of course, going ex-Mick Davis and cum-Ivan Glasenberg as soon as the last bits of competition authority clearance arrive…
Ivan has already sent industry tongues a-wag with some off-the-grid comments at a BMO Capital Markets conference in Florida, as reported by Reuters:
What we’ve got to do, when the markets do get stronger, no need to keep building a new asset and let’s keep the market tight for a while…
Alternate working title: Opec-cartel style
We’ve already heard from Oleg Deripaska on the matter. And we’ve started to see the consequences hit Rio Tinto and BHP Billiton. But the latest “we must rein in supply” Opec-cartel style talk, actually emanates from Glencore CEO Ivan Glasenberg.
Bloomberg has the story ( hat tip to Reuters’ John Kemp) and it offers few cracking paragraphs to say the least: Read more
Maybe this was inevitable after the Qataris said they would approve Xstrata’s merger with Glenstrata, but would abstain on the retention bonuses. But the raw numbers of shareholders here saying payments to management were excessive suggest a very aggressive mood amongst institutions. Remember, this is a revised incentive scheme, where shareholders were supposed to have been listened to…
The result from Xstrata’s shareholder meeting on Tuesday… Read more
Subject to the vote of Xstrata shareholders later on Tuesday, of course. And one or two regulatory hurdles remain. But while we wait for the XTA vote, here are the voting results of the Glencore shareholder’s meeting… Read more
A few nervous bid arbitrageurs have their eyes on the Qataris right now — wondering, expectantly, whether the Gulf state’s sovereign wealth fund will now support the takeover merger of equals between Glencore and Xstrata.
The Glenstrata share ratio has been hiked and the Qataris, it is assumed, don’t really care about the size of retention bonuses at Xstrata. But a public endorsement of the deal was noticeably lacking on Monday… Read more
Here’s the key bit from Monday’s confirmation that Xstrata’s independent directors are once again recommending merger terms from Glencore…
1. To approve the New Scheme subject to the resolution to approve the Revised Management Incentive Arrangements to be put to the Further Xstrata General Meeting being passed. The Independent Xstrata Non-Executive Directors intend to recommend unanimously that eligible Xstrata Shareholders vote in favour of only this resolution at the New Court Meeting; and Read more
So much for D-Day in the unending saga of the Glencore-Xstrata tie-up.
Hot off the RNS feed on Friday: Read more
When the chief executive of UC Rusal, Oleg Deripaska, takes to the pages of the FT to air his frustrations about his industry, you’ve got to sit up and listen. Especially when he concludes that output caps are needed to overcome the problems.
Rusal, of course, is one of the world’s top aluminium producers and Deripaska, it turns out, wants output caps because he is worried about the strange anomalies which are gripping his market. Read more
Final terms from Glencore in its hostile bid for Xstrata include this weird proposal:
In order to provide clarity on the issue of CEO succession, Mick Davis will become the Chief Executive Officer and executive director of the Combined Group on the Merger becoming effective but to step down within 6 months with Ivan Glasenberg becoming Chief Executive Officer of the Combined Group at that time. Read more
Fierce statement out of Xstrata on Friday afternoon…
The Independent Directors of Xstrata plc have today written to Glencore International plc to request clarification of the outline proposal (the “Proposal”) provided to the Xstrata Board immediately prior to the Xstrata Court Meeting and New Xstrata General Meeting today in Switzerland. Read more
Yup. Bouncing back from the Archbishop Tutu affair, the former British Prime Minister is understood to be acting as a last minute peacemaker between Glencore’s Ivan Glasenberg and Qatar Holding, the SWF that is threatening to quash the $70bn merger of Glencore and Xstrata.
That’s the “development” referred to earlier by Glencore as it adjourned its shareholder meeting on Friday in Switzerland. Read more
At around 8.20am this morning, there was some news from the Theatre-Casino in Zug.
Xstrata had adjourned EGM for the $80bn merger following a “development”. Read more
How do you price in the unwinding of a fantasy takeover bid?
That’s the challenge in the London mining sector as the promise of Glencore merging with its long-term associate Xstrata fades. Read more
That’s Xstrata, down 6 per cent at 910p at pixel. It was sitting at the top of the Footsie “losers” board towards the end of Wednesday’s session, just above would-be merger partner Glencore International, which had itself fallen 4.5 per cent to 350p. (Both prices subsequently rallied as the market closed.) Read more
Click image for the full, 136-page doc.
You know things are tricky when your energy options are Iran, Glencore or blackouts, and then the Iran option is removed.
We’ve known for while that Greece’s reliance on Iranian oil has put it in a difficult situation, at time when banks are pulling letters of credit and Iran sanctions bite. This was an early sign of creditors’ fear of drachma exposure. Read more
Kudos to Foreign Policy for spending a year investigating Glencore.
Did you know, for example, that the name “Glencore” comes from: GLobal ENergy COmmodities and REsources? According to Foreign Policy, this was actually considered a secret (bizarrely enough). Read more
It’s hard being listed, huh?
In his first television interview, Glasenberg said that Glencore took corporate responsibility seriously, saying: “We care about the environment. We care about the local communities.” Read more
Can it really be true that advisers to Glencore and Xstrata did not envisage a referral to the competition authorities in Brussels when planning their $90bn $80bn merger?
French banks are stepping back into funding commodities trades, after pulling back on lending last year due to a dollar liquidity shortage.
But this time, it’s securitised. As the FT reports: Read more
The concept of Ivan Glasenberg on a charm offensive is hard to grasp. Charm is not generally considered one of the key characteristics needed to be a top trader, but he’s going to need all that he can find to push through the shotgun merger of Glencore, the business he built, with Xstrata. There’s an awful lot riding on this $90bn deal, not least the estimated $100m payday for those poor, starving investment bankers who are desperately trying to get it done.
Alas for Ivan, the omens look poor, thanks to an extraordinary blunder designed to save a relatively trivial amount of tax. The preferred route, a scheme of arrangement, escapes the stamp duty that would be payable in a conventional takeover. In a scheme, approval by 75% of shareholders who vote clinches the deal, but Glencore itself cannot vote its 34% shareholding in Xstrata. It needs a maximum of 16.5% of the shares to be voted against for the deal to fail. In practice, something like 12% against would probably scupper it, since not every share will be voted. Read more
Glencore has warned resisting shareholders of Xstrata that it has walked away from deals before rather than fail to agree terms, days into its fight to convince them of its $36bn bid, Reuters reports. The trader warned institutional investors that they face “asymmetric” risks if the deal fails, in advance of a shareholder vote this summer. Xstrata shareholders who seek a higher offer have nonetheless dug in their heels, pointing to the impact on Glencore if takeover talks collapse. Glencore is currently offering 2.8 new shares per Xstrata share. Read more
Glencore has stuck to the terms of its proposed merger with Xstrata to create a $90bn natural resources champion, saying that the “natural combination” will realise immediate value to shareholders, the FT reports. The world’s largest commodities trading house has offered 2.8 of its own shares for each of the miner’s. Glencore issued its preliminary results on February 7, when both companies announced their merger deal, and the official release on Monday confirmed them. The commodities trader said that higher commodity prices lifted earnings at its mines and other production assets – including its 34 per cent stake in Xstrata. The trading house reported net income of $4.06bn before exceptional items, up 7 per cent from last year. But the profits were hurt by a large loss in cotton trading and low earnings in energy transactions in the second half of the year. Glencore said it lost more than $330m in cotton trading due to exceptional volatility in prices last year. Read more
From the FT on Friday:
Executives at Glencore, the world’s largest commodities trader, and Xstrata, the mining group, had been confident that their deal would not require a formal investigation by the European Commission. Read more
If he’s selling, I’m not buying. This was an excellent plan with last year’s public offer of Glencore shares. Dazzled by the fees and muzzled by the conflicts of interest, very few mining analysts were in a position to say what they thought. The result was a high pressure sales pitch, a willing suspension of disbelief among investors, and a 530p launch price that’s never been reached since.
So what about the converse – if he’s buying, should I be selling? Ivan Glasenberg, the architect of today’s Glencore, clearly yearns to merge. It’s not yet a year since the botched flotation, but so keen is he that he’s yielded the posts of chairman, chief executive and finance director to Xstrata as the price of agreement. This is either a demonstration of what a warm-hearted, selfless individual he really is, or a tacit admission that Glencore’s years of making killings from commodity trading are coming to an end. Read more
Older entries
1Alphachat: Lee Buchheit edition, featuring Lee Buchheit
2Further reading
3"This is Lake Wobegone upside-down"
4The risk of a Japanese VaR shock
5Re-setting ENRC (updated)
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