Glencore ceo Ivan Glasenberg batted aside calls for the company
to boost its bid for mining company Xstrata in a conference
call on Tuesday August 21.
The London-listed trading company and producer is holding firm
at its merger ratio for Xstrata of 2.8 of its shares for every
one of the diversified miners, Glasenberg said in a
conference call after the company released its first-half 2012
, which fell by 17% year-on-year to $3.2 billion.
Speculation had mounted that Glencore could bow to pressure
from Qatar Holding, the Qatari sovereign wealth fund that holds an
e in Xstrata, to bump the ratio up ahead of the
vote by Xstrata shareholders on September 7.
But Glasenberg was adamant during the call that he could see no
reason to push it up to 3.25 of its shares for every Xstrata
share, as Qatar Holding had requested at the end of June.
There was a significant premium in that 2.8 ratio
already. One should not forget this was a heavily negotiated
deal by Xstrata, Glasenberg said.
Mick Davis negotiated this deal over a long period of
time. He understood the synergies involved.
and the whole management team are fully supportive of the
The board of directors at Xstrata voted unanimously in favour
of the deal, Glasenberg said, and believe they have put
together a solid transaction for their shareholders.
He added, furthermore, that Glencore cannot and will not pay
more than is absolutely necessary for the merger with Xstrata.
We dont want to dilute value. A big chunk of
Glencore is owned by its employees and none of our existing
shareholders want us to overpay, Glasenberg said.
Xstrata has supported the merger to the hilt, the
Glencore ceo said, and based on the miners recent first
half performance, the ratio remains generous.
We think its a good number and the Xstrata
management believe its a good number. Weve not met
a shareholder whos shown us something we havent
seen, and I dont think theyve shown Xstrata
anything they havent seen, Glasenberg said.
Weve got to be careful not to overpay. We think 2.8
shares is a substantial premium. What [Qatar Holdings]
angle is confuses us, but its not for us to
speculate, he added.
Qatar Holding edged over a 3% holding in Xstrata in February,
after the announcement of the proposed merger, after which it
was obligated to disclose any further share purchases in the
In June, it called for an increased merger ratio of 3.25
Glencore shares for every Xstrata share, which contributed to
the postponement of the shareholder vote on the deal.
The question is what are they really trying to do? None
of the long-term shareholders are against the deal or even the
ratio. Some have come out and said they would like more, but
today, I dont think there are many out there,
How [Qatar Holding] came up with 3.25 and how they can
justify it, I dont know. They only increased the stake
[to 11.8%] after the announcement, which should tell you they
like the deal. Theyre trying to squeeze us to a better
ratio, but we cannot overpay.
The real reason behind the sovereign wealth funds
decision to increase its stake in Xstrata to this level only
after the announcement of the merger is not known, however,
Maybe they know something Xstrata dont. I
dont know, he said.
Glencores shares were trading at 352.85 pence ($5.54)
each on the London Stock Exchange as of 11.49 BST on Tuesday,
relatively flat against the previous days closing level.
Xstratas shares, meanwhile, were trading at 916.2 pence
each as of 11.50 BST, representing a ratio of 2.6 Glencore
shares for every share in the miner.