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…
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
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.
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?
Seems so… 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
Several large investors have threatened to block Glencore and Xstrata’s proposed all-share merger, which would create a $90bn commodities giant in the largest global mining deal on record, reports the FT. Opponents of the deal said on Tuesday that the offer of 2.8 Glencore shares for every Xstrata share undervalued the miner of thermal coal, copper, nickel and zinc. Glencore, the world’s largest commodities trader, would end up with a 55 per cent stake in the combined group. Standard Life, the miner’s fifth-biggest shareholder with a holding of about 2 per cent, said it would vote against the deal. “Although we see some merit in the merger of Xstrata and Glencore the proposed exchange ratio clearly undervalues Xstrata’s assets and future earnings contribution,” said David Cumming, head of equities. Standard Life also owns a 0.3 per cent stake in Glencore. Richard Buxton, head of UK equities at Schroders, which owns a 0.6 per cent stake in Xstrata, said: “This is a fabulous deal for Glencore, it’s probably a great deal for the Xstrata management, but it’s a poor deal for Xstrata’s majority shareholders.” Two other leading investors, who declined to be identified, also told the Financial Times they did not support the transaction. Xstrata shares excluding Glencore’s 34 per cent holding, meaning a 16.5 per cent vote against the deal would block it. The WSJ says “a number” of Xstrata’s top investors said on Tuesday that they hadn’t made up their minds yet on how to vote, while a spokeswoman for BlackRock, which owns a 5.8 per cent stake, declined to comment.
BHP Billiton, the world’s biggest mining company, sees no reason to change its strategy in light of Glencore’s proposed merger with Xstrata, the FT reports. “People have asked me does this deal make a difference to you, and I would say it doesn’t make difference to our strategy, it doesn’t make a difference to our philosophy,” Marius Kloppers, BHP’s chief executive, said on Wednesday after the release of interim results. His comments came after BHP reported a 6 per cent rise in half-year underlying earnings before interest and tax to $15.7bn, a result that was slightly ahead of analyst forecasts. Record production from BHP’s iron ore mines in Western Australia and a gain in bulk commodity and petrol prices were behind the rise. Read more
The FT reports that several large investors have threatened to block Glencore and Xstrata’s proposed all-share merger, which would create a $90bn commodities giant in the largest global mining deal on record. Opponents of the deal said on Tuesday that the offer of 2.8 Glencore shares for every Xstrata share undervalued the miner of thermal coal, copper, nickel and zinc. Glencore, the world’s largest commodities trader, would end up with a 55 per cent stake in the combined group. “This is a fabulous deal for Glencore, it’s probably a great deal for the Xstrata management, but it’s a poor deal for Xstrata’s majority shareholders,” said Richard Buxton, head of UK equities at Schroders, which owns a 0.6 per cent stake in Xstrata. Read more
Glencore and Xstrata on Tuesday announced an all-share merger that would create a $90bn giant combining the world’s largest commodities trading house with one of the biggest miners of thermal coal, copper, nickel and zinc, the FT reports. Under the agreement announced in a joint statement, investors in the miner would receive 2.8 Glencore shares for every Xstrata share they hold. That ratio puts a greater relative value on Xstrata shares than most investors had expected, representing a 15.2 per cent premium over the closing share price on February 1. “We have a fantastic opportunity to create a new powerhouse in the global commodities industry,” said Ivan Glasenberg, chief executive at Glencore. Mr Glasenberg and Mick Davis, his counterpart at Xstrata, agreed the make-up of the combined company’s board and senior management. Sir John Bond, Xstrata’s chairman, will stay on as chairman of the enlarged group. Mr Davis will become chief executive and Mr Glasenberg deputy chief executive. Read more
The Scheme will be subject to the following conditions:
2.1 its approval by a majority in number of the Scheme Shareholders who are on the register of members of Xstrata at the Scheme Voting Record Time, and who are present and vote, whether in person or by proxy, at the Court Meeting and at any separate class meeting which may be required (or any adjournment thereof) and who represent not less than 75 per cent. in value of the Scheme Shares held by those Scheme Shareholders; Read more
Glencore is likely to pay out an eight per cent premium in its planned $88bn takeover of Xstrata, up sharply from previous expectations, the FT reports. Institutional investors had called for a larger premium given the loss of control represented by the merger deal, which would create a trader-miner giant in the natural resources industry. Under the proposed takeover, Glencore’s current shareholders would own 56 per cent of the combined company. Fewer than 17 per cent of Xstrata’s shareholders need to vote against a merger to sink it. Investors have rejected miners’ “mergers of equals” before — including Xstrata’s own 2009 bid for Anglo American, the WSJ says. Read more
Glencore is set to pay a larger premium than expected to seal its long-coveted merger with Xstrata, the FT says, a move designed to defuse concerns among Xstrata investors about a cosy deal between the chief executives of the two companies. The companies over the weekend hammered out the terms of an agreement on an $88bn merger that would combine the world’s leading trading house with one of the biggest mining groups. Under the agreement, which was still being finalised on Sunday night and is likely to be announced along with Xstrata’s annual results on Tuesday, investors in the miner would receive 2.8 Glencore shares for every Xstrata share they hold. That ratio puts a greater relative value on Xstrata shares than most analysts or investors had expected, representing an 8 per cent premium over the closing share price on Wednesday, when the ratio was 2.59. Ivan Glasenberg and Mick Davis, the chief executives of Glencore and Xstrata, respectively, have also agreed the make-up of the combined company’s board and senior management. Read more
Glencore and Xstrata could formally announce an $88bn merger as soon as next Tuesday, the FT reports. The deal — modestly codenamed “Everest” — is already being watched for the firepower it could give both firms to bid for rivals within the natural resources industry. Combined, Glencore and Xstrata would create the world’s largest exporter of zinc and coal, and its third-largest in copper, but would leave an opening in iron ore. That may make an assault on the forces of BHP Billiton, Vale, and Rio Tinto, Reuters says. Anglo American, a failed bid target of Xstrata in 2009, could be one high-profile name thrown into a round of consolidation, the WSJ notes. Read more
Glencore and Xstrata have launched merger talks to create a $88bn commodities trading and mining giant with the financial muscle to sweep up some of its biggest rivals, reports the FT. The all-share merger, which could be formally announced as soon as Tuesday, would turn the natural resources industry worldwide on its head by combining the world’s largest trading house with one of the biggest mining groups. Separately, the FT reports that after a less than stellar year for the mergers and acquisitions market in 2011, and the worst start to the year it has had for a decade, the potential merger is also likely to give a more than $100m boost to the advisers involved. Deutsche Bank, Goldman Sachs, JPMorgan and Nomura are advising Xstrata on the deal, while Citigroup and Morgan Stanley are advising Glencore. Read more