The universe is for sale. Haven’t you heard? It was on the front page of the FT, so it must be. Apparently the Qataris are favourite to buy it. 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
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
Senior BNP Paribas executives are to tour the Middle East in coming days in an attempt to raise fresh capital and shore up confidence in the bank, the FT says, citing people close to the group. Baudoin Prot, chief executive, is adamant that he has sufficient reserves of both capital and liquidity, the sources say, but he recognises that market jitters could worsen if nothing is done. At the same time, BNP executives have urged regulators to carry out an emergency stress test in an effort to pinpoint exactly where the weaknesses are in the French banking system. That could lead to some kind of orchestrated injection of state funds, bankers say. But BNP is keen to secure a commercial investor instead. The plan, which is being touted to investors in Qatar and Abu Dhabi, is at an early stage and details remain sketchy. People involved have estimated it might amount to as much as €2bn ($2.7bn). BNP’s exposure to peripheral eurozone sovereign debt is the highest among French banks.
Despite the prospects of entering a golden age for natural gas, investors are looking decidedly less excited about LNG.
Australia is set to take over Qatar as the biggest exporter of LNG within the next decade or so. Read more
Ministers are open to the idea of a Qatari-backed consortium taking over the Olympic Park even though they look set to reject a similar proposal from Wellcome Trust, the FT says. The government is continuing to analyse an unsolicited offer put at £1bn from the UK-based charity to take over all the freehold assets of the park. But that proposal looks doomed after ministers instructed the Olympic Delivery Authority two weeks ago to begin exclusive talks with the consortium of Delancey and Qatari Diar to buy up the Olympic Village, a key component.
Qatar has become the first Arab country to recognise Libya’s rebel national council as the representative of the North African nation, easing the way for the opposition to profit from oil sales on global markets, reports the FT. Over the past two days, rebels have seized control of the bulk of Libya’s oil industry – including the country’s largest oilfields in the so-called Sirte basin and the main terminals – as they have pushed back Muammer Gaddafi’s forces with the assistance of Nato air strikes. Read more
Qatar has become the first Arab country to recognise Libya’s rebel national council as the representative of the North African nation, easing the way for the opposition to profit from oil sales on global markets, reports the FT. Over the past two days, rebels have seized control of the bulk of Libya’s oil industry – including the country’s largest oilfields in the so-called Sirte basin and the main terminals – as they have pushed back Muammer Gaddafi’s forces with the assistance of Nato air strikes. Read more
On Monday, Qatar gave diplomatic recognition to Libya’s rebels.
On Saturday — Qatar Petroleum had agreed to market Libyan oil controlled by the rebels to international buyers. Read more
How to hedge the Saudi monarchy?
We’ve asked it before on FT Alphaville, given how unrest would throw the oil market into extreme volatility. We’re sceptical you could even try, but we’re sure there’s more to it than the ‘all bets are off’ line we often hear about the prospect of Saudi protests. Read more
Qatar is considering taking a stake in Glencore as the world’s largest commodities trader canvasses potential cornerstone investors for its much-anticipated $60bn IPO in London and Hong Kong in the second quarter, reports the FT. Qatar prime minister, Sheikh Hamid Bin Jasim al Thani, said in Doha that the country’s sovereign wealth fund would meet Glencore’s top management and bankers this week to discuss a possible investment. The talks with Qatar Investment Authority are part of Glencore’s strategy to meet a “broader” group of investors, including SWFs and UK-based institutional investors. Swiss-based Glencore is expected to disclose IPO plans that could value the group at just over $60bn, in coming weeks. But it has not decided whether to proceed and could yet seek a merger with Xstrata, the UK-listed miner in which it owns a 34% stake. Read more
Abu Dhabi is in talks to buy the 20% stake in the London Stock Exchange Group owned by Borse Dubai for $1.5bn, reports Reuters citing the Sunday Times, and the three stock exchanges in the United Arab Emirates may merge as part of the deal. The LSE stake sale would be part of an Abu Dhabi buyout of exchange operator Borse Dubai and would follow the latter’s sale of about half its shares in Nasdaq OMX last week, it adds. Borse Dubai owns controlling stakes in Dubai Financial Market and Nasdaq Dubai, plus 20% of the LSE and a remaining 17% stake in Nasdaq OMX. The Telegraph adds that any discussion of a Dubai LSE stake sale is likely to prompt Qatar to make a counter offer for the shares. Read more
ACS of Spain on Wednesday sweetened its offer for Hochtief, hours after the German construction company formally rejected what it had described as a hostile, lowball bid to gradually take control, reports the FT. Spain’s biggest engineering group said it would offer nine ACS shares for every five in Hochtief, instead of its initial eight-for-five offer announced in September. The move came as Herbert Lütkestratkötter, Hochtief’s CEO, reversed his refusal to meet ACS and said talks would commence soon. ACS’s revised bid followed Hochtief’s deal last week to sell 10% of new equity to a Qatari investment fund. The WSJ notes that already, the bid is testing Germany’s tolerance for foreign acquisitions in key industries. Read more
Qatar is eyeing a possible offer for Christie’s, the auction house controlled by French businessman François Pinault, in its push to establish itself as a top cultural destination in the Gulf, reports the FT. Although Christie’s has yet to receive a formal approach, Qatar’s emir, Hamad bin Khalifa al-Thani, told the FT he would be interested in bidding for the auction house, saying:“If we had a good opportunity we would not hesitate.” Members of the Qatari ruling family have collected regional and international art for decades, and are major clients of Christie’s. Christie’s said there had been no formal approach. Read more
Hopes that the UAE and Qatari stock markets would be upgraded to emerging market status by MSCI Inc suffered a blow on Tuesday after the index provider said it was to continue classifying them as frontier markets, the FT’s beyondbrics blog reported. MSCI said in a statement that both the UAE and Qatar needed to move away from the frequent use of dual account structures, such as separate custody and trading accounts. Read more
Agricultural Bank of China has secured some international cornerstone investors to take up to 40% of the Hong Kong portion of its initial public offering amid concern over weak investor interest in the mega-listing, the FT reports. The sovereign wealth funds of Kuwait, Qatar and Singapore have all signed up to take a portion of the shares on sale in Hong Kong before ABC begins marketing them to institutional investors. Read more
The Qatar Investment Authority, the Middle Eastern sovereign wealth fund, has expressed interest in buying part of the US Treasury’s 27% stake in Citigroup, potentially boosting efforts to sell the shares, reports the FT. The fund’s interest in Citi, which was bailed out by the government after losing $50bn in the financial crisis, comes as other cash-rich SWFs are avoiding banks. The QIA however has done well on investments in Credit Suisse and Barclays during the crisis. Read more
Algeria, one of Europe’s three biggest gas suppliers is calling on fellow gas exporting countries to reduce their production in order to boost prices. It is the first time Chakib Khelil, Algeria’s energy minister, has made such a clear plea for united action and highlights the strong pressure gas producers are facing because of oversupply, especially in Europe. If countries such as Qatar and Russia agree with the plan, it could transform the natural gas market and lead to higher prices. For the first time, analysts now suggest such agreement could be possible, if, as several expect, prices fall further in the coming months, the FT reported. Read more
The three banks backing Prudential’s $35.5bn bid for AIG’s Asian arm said on Thursday that the sovereign wealth funds of Qatar and Singapore had joined 30 banks in the syndicate to underwrite the UK insurer’s $20bn rights issue. Alongside the issue, the Pru will also issue to AIG $5.5bn of stock, $3bn of convertible notes and $2bn of preferred shares. Credit Suisse, JPMorgan and HSBC are acting as joint global co-ordinators. See also Lex, here. Shares in the Pru increased a further 2.6% in London on Thursday after plunging nearly 20% on Monday’s deal, while reports emerged about possible losses at GIC, the Singaporean SWF investing in the deal. Read more
Porsche plans to increase its capital base by at least €5bn in a move to bolster its sagging balance sheet ahead of a planned, though controversial, integration of carmaking operations with its German rival Volkswagen, the FT reported. The sports car group gave few details of the structure of any capital boost and said nothing on the future of its chief executive Wendelin Wiedeking; nor did it comment on speculation that the emirate of Qatar would be taking a stake. Read more
Talk of a natural-gas alliance is officially back.
Following high-level talks in Tehran, Iran, Qatar and Russia are to forge a so-called “Gas Troika”. Read more
Qatar is reviewing its currency policy and could revalue or drop the dollar peg as the booming Gulf state struggles to tame inflation while the US reduces interest rates to head off a recession. Qatari officials on Wednesday said the gas-rich emirate was considering revaluing its currency or linking it to a trade-weighted basket of currencies as well as other policy proposals aimed at cooling rampant inflation of up to 15%. Abdullah al-Attiyah, the oil minister and deputy prime minister, said the central bank and finance ministry were studying a currency revaluation, although he did not discuss timing. Ibrahim Ibrahim, an economic adviser to the government, told the FT that while official policy was to maintain the Qatari riyal’s peg to the dollar, that could change with time. Ibrahim said other inflation-taming measures were under consideration, including a bond issue to soak up liquidity and the possible introduction of lending caps on banks. Read more
From the editors,
FAO: All newsreaders, bizcasters and researchers
Re: Apple Dubai
It has come to our attention that there have recently been several holes in our coverage of the Middle Eastern financial situation. Read more
Sainsbury’s shares were left reeling as the Qatar-backed fund Delta Two walked away from its £10.6bn indicative bid for the company, unwilling to stump up a further £500m of equity to clinch the deal. The news wiped just over a fifth off the supermarket chain’s share price, taking the market capitalisation to £7.66bn. The QIA, which owns 25 per cent of J Sainsbury stock, was sitting on a paper loss of £500m on Monday night. Everyone has lost out from this game of chicken, says Lex. The Sainsbury board now appears at the mercy of its strategic shareholders. The Qataris look at best indecisive and at worst irresponsible. The main losers, though, are Sainsbury’s long-suffering institutional and retail shareholders Read more
How embarrassing. After months of negotiation – over price, over gearing, over pensions – the Qatar-backed £10.6bn bid for Sainsbury got so close to shopping success, only to collapse before reaching the checkout.
Sainsbury’s board, until last week expressing quiet confidence that the sovereign fund would come up with the cash, must be irate. Paul Taylor, head of Three Delta, adviser to the Delta Two fund which bid 600p a share for Sainsbury in July, must also be hopping. He was reported to have been keen that the sovereign fund proceed with its bid. Read more
The Qatar Investment Authority was on Sunday last night on the brink of abandoning its £10.6bn bid for J Sainsbury, reports the Times. Sources in Qatar said it was “highly unlikely” that the QIA would press ahead with its bid, given the need for an additional £500m to keep the offer alive. An announcement about its decision to withdraw could be made as soon as Monday, the story adds. The move to walk away would bring to an end months of wrangling between the QIA, which invests on behalf of the Qatari Government, Sainsbury’s board and its pension trustees. Read more
The future of J Sainsbury will be decided in the next 10 days as the Qatar Investment Authority decides whether to plug a £500m shortfall in its takeover bid for the UK supermarket. There is pride at stake, with the sovereign investment fund controlled by Sheikh Hamad bin Jassim Al Thani, Qatar’s prime minister, keen to bring the £10.6bn deal to a successful conclusion but unwilling to set a precedent as an investor willing to pay too much. No meeting has been scheduled between Delta Two, the vehicle attempting to carry out the transaction, and the QIA, but one is expected to take place this week. Read more
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1Alphachat: Lee Buchheit edition, featuring Lee Buchheit
2Further reading
3The risk of a Japanese VaR shock
4"This is Lake Wobegone upside-down"
5Re-setting ENRC (updated)
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