Glencore expected to sweeten terms to win Xstrata

Comment on this story


Glencore

REUTERS

The Glencore logo is seen on a sign in front of Swiss commodities trader Glencore building in Baar near Zurich.

Commodities trader Glencore, scrambling to save its $26 billion bid for miner Xstrata, will need to sweeten the terms or put its long-desired deal at risk after key shareholder Qatar threatened to oppose the offer.

Qatar, which remained silent on its intentions for months as it built the second-largest stake in Xstrata, said in a surprise statement on Tuesday that it supported the principle of the deal but demanded an improvement in terms from 2.8 new Glencore shares for every Xstrata share to 3.25.

The 11th-hour rebuff will make it very difficult for Glencore and Xstrata to push the merger through on current terms, several sources close to the deal said, leaving two days for Glencore to sweeten the offer or delay shareholder meetings scheduled for mid-July.

“Maybe this now allows the deal to be restructured, to make it more likely to succeed, and the external pressure allows this to happen without too much loss of face,” one top 40 Xstrata shareholder told Reuters.

The statement triggered intense negotiations and an emergency charm offensive from Glencore executives trying to understand the Gulf state's motivations and bring them back onside.

“Glencore need to talk to Qatar and find out what they are thinking,” said one source familiar with the matter, adding it was too soon to write off the deal.

Analysts cautioned, however, that the deal could well be kicked down the road for at least six months or as much as 12, as Glencore could refuse to budge.

“Given conditions in the market, a lower offer would be more suitable than an improved one, so I think anyone hoping for an improved bid is optimistic,” one analyst who asked not to be named told Reuters.

“Without changes, the deal is definitely dead in the water. But don't underestimate Glencore's confidence in its position.”

The last-minute demand added to further pressure from shareholders already angered by hefty executive retention payments tied to the deal, regardless of performance.

In the first sign of movement, Glencore released a short statement on Wednesday morning saying the board of Xstrata had proposed to change certain aspects of the management incentive arrangements.

A source familiar with the situation said the proposed changes include tying pay to performance.

“I really don't expect them to go to 3.25 or to get rid of the retention package completely, but I think it may well be worth their while to come up with some sort of compromise,” said Charles Stanley analyst Tom Gidley-Kitchin.

At a ratio of 3.25 percent, the offer would be worth $30 billion.

Glencore, which made its move on Xstrata in February, had been expected to improve the terms of its all-share deal in the early days after the offer was announced.

But those hopes faded in the months that followed as Glencore, already Xstrata's largest shareholder, with almost 34 percent, stuck to its guns, as target Xstrata faced falling thermal coal prices and increased uncertainty over Argentina and Peru - key to its growth prospects.

On Tuesday, before Qatar's unexpected announcement, Xstrata shares were trading around a 2.6 ratio, implying the market was not expecting a change to terms. Shares in Xstrata were flat, and Glencore's down about 1.5 percent in early trade on Wednesday.

Analysts said the unexpected intervention from Qatar meant a change in Glencore's terms - combined with the changes to retention packages for Xstrata bosses - was now virtually inevitable to rescue the deal to create an integrated mining and trading powerhouse.

But they said it was not clear Glencore would raise its bid as high as 3.25 - at the high end of initial expectations and a level at which some say the deal could destroy value for Glencore.

“We believe a bump - probably from 2.8 to 3.0 Glencore shares per Xstrata share - may be necessary to win over (Qatar) and other Xstrata shareholders,” Jefferies analysts said in a note. “However, we do not believe Glencore will bump to a ratio of 3.25 times.”

Analysts said failure to secure the deal would not only cause a short-term drop in Xstrata shares, currently trading at a premium to the sector, but would also prove damaging for Glencore, whose bosses have long traded on their reputation as dealmakers.

It would also, though, prove potentially damaging for Qatar, which has invested more than $4 billion to become Xstrata's largest minority shareholder.

NEGOTIATING POSITION

Several sources close to the deal said on Tuesday that Qatar's demand for 3.25 was likely a negotiating position, part of a strategy that included Tuesday's unexpectedly public statement.

“In our view, the news about Qatar requesting a bump and the recent strong shareholder opposition to the Xstrata management retention awards are problems. But ... these are likely not insurmountable hurdles to the proposed Glencore Xstrata merger,” Jefferies said. “A bump from Glencore and a revision to the management retention awards should be the logical next steps. We continue to expect this proposed merger to happen.”

Glencore and Xstrata have until Thursday to alter the terms of the deal without having to change the dates of shareholder votes, set for mid July.

Glencore and Xstrata have declined to comment on the Qatari announcement. - Reuters


sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

     

Join us on

IOL-Social networks IOL-Social networks IOL-Social networks IOL-Social networks
JanieL
I'm a 24 year old woman looking to meet men between the ages of 25 and 32.
View Profile
Bebe1000
I'm a 53 year old woman looking to meet men between the ages of 49 and 57.
View Profile
Okidoki_63
I'm a 51 year old woman looking to meet men between the ages of 45 and 60.
View Profile
sexyhair
I'm a 42 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Vuurvliegie1974
I'm a 40 year old woman looking to meet men between the ages of 39 and 47.
View Profile
SilverLiningM
I'm a 29 year old woman looking to meet men between the ages of 25 and 36.
View Profile
your_wildest_dreams
I'm a 36 year old woman looking to meet men between the ages of 40 and 55.
View Profile
Jobaby10
I'm a 36 year old woman looking to meet men between the ages of 38 and 45.
View Profile
Midcentury_girl
I'm a 32 year old woman looking to meet men between the ages of 30 and 40.
View Profile
Blondie_434
I'm a 31 year old woman looking to meet men between the ages of 28 and 43.
View Profile
Liefieling86
I'm a 28 year old woman looking to meet men between the ages of 29 and 32.
View Profile
FaiRy9
I'm a 26 year old woman looking to meet men between the ages of 27 and 36.
View Profile
Dollie81
I'm a 33 year old woman looking to meet men between the ages of 25 and 49.
View Profile
Lala8610
I'm a 28 year old woman looking to meet men between the ages of 27 and 32.
View Profile
Artistixoxo
I'm a 23 year old woman looking to meet men between the ages of 23 and 28.
View Profile
pikkewyn_123
I'm a 38 year old woman looking to meet men between the ages of 36 and 40.
View Profile
Jimmyhgirl
I'm a 37 year old woman looking to meet men between the ages of 18 and 100.
View Profile
Smileawhile
I'm a 45 year old woman looking to meet men between the ages of 38 and 52.
View Profile
Bianx24
I'm a 24 year old woman looking to meet men between the ages of 25 and 30.
View Profile
EMT2014
I'm a 30 year old woman looking to meet men between the ages of 30 and 40.
View Profile
JayAnne
I'm a 56 year old woman looking to meet men between the ages of 56 and 70.
View Profile
AgentI
I'm a 39 year old woman looking to meet men between the ages of 35 and 45.
View Profile
MizLiz
I'm a 31 year old woman looking to meet men between the ages of 30 and 40.
View Profile
Warmsmilewarmheart
I'm a 47 year old woman looking to meet men between the ages of 40 and 55.
View Profile
TuffLove
I'm a 34 year old woman looking to meet men between the ages of 35 and 45.
View Profile
Mickey101
I'm a 25 year old woman looking to meet men between the ages of 25 and 30.
View Profile
Minky3001
I'm a 30 year old woman looking to meet men between the ages of 32 and 40.
View Profile
Cathwhite
I'm a 29 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Moze008
I'm a 57 year old woman looking to meet men between the ages of 55 and 70.
View Profile
Foreverinhope
I'm a 48 year old woman looking to meet men between the ages of 45 and 56.
View Profile
LeilaM
I'm a 40 year old woman looking to meet men between the ages of 40 and 55.
View Profile
Gemima
I'm a 38 year old woman looking to meet men between the ages of 40 and 50.
View Profile
Rarefind
I'm a 55 year old woman looking to meet men between the ages of 52 and 63.
View Profile
Apple_853
I'm a 35 year old woman looking to meet men between the ages of 35 and 45.
View Profile
CTBLONDE
I'm a 38 year old woman looking to meet men and women between the ages of 40 and 50.
View Profile
chloeeeee
I'm a 44 year old woman looking to meet men between the ages of 35 and 52.
View Profile
NotADog
I'm a 42 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Crispy990
I'm a 24 year old woman looking to meet men between the ages of 24 and 35.
View Profile
BlondeBerry
I'm a 33 year old woman looking to meet men between the ages of 29 and 40.
View Profile
Bluebell531
I'm a 46 year old woman looking to meet men between the ages of 40 and 60.
View Profile
Judith78
I'm a 36 year old woman looking to meet men between the ages of 38 and 48.
View Profile
Sonskyn83
I'm a 31 year old woman looking to meet men between the ages of 30 and 45.
View Profile
Lady_101
I'm a 31 year old woman looking to meet men between the ages of 28 and 38.
View Profile
luvlie
I'm a 48 year old woman looking to meet men between the ages of 46 and 52.
View Profile
Bienkie01
I'm a 35 year old woman looking to meet men between the ages of 34 and 48.
View Profile
Fire_and_Ice81
I'm a 33 year old woman looking to meet men between the ages of 25 and 45.
View Profile
sonskyn27
I'm a 56 year old woman looking to meet men between the ages of 45 and 55.
View Profile
SalsaHoney
I'm a 34 year old woman looking to meet men between the ages of 30 and 40.
View Profile
Kay_722
I'm a 29 year old woman looking to meet men between the ages of 30 and 40.
View Profile
klouise
I'm a 32 year old woman looking to meet men between the ages of 31 and 39.
View Profile
PowerPrincess
I'm a 41 year old woman looking to meet men between the ages of 38 and 47.
View Profile
dragonfly86
I'm a 28 year old woman looking to meet men between the ages of 28 and 35.
View Profile
KW82
I'm a 32 year old woman looking to meet men between the ages of 29 and 40.
View Profile
ShanJo
I'm a 35 year old woman looking to meet men between the ages of 30 and 42.
View Profile
WandaLove
I'm a 19 year old woman looking to meet men between the ages of 22 and 26.
View Profile
sweets1987
I'm a 27 year old woman looking to meet men between the ages of 32 and 42.
View Profile
Lilakii
I'm a 21 year old woman looking to meet men between the ages of 23 and 31.
View Profile
khosyx
I'm a 20 year old woman looking to meet men between the ages of 21 and 30.
View Profile
MissMoneypenny_13
I'm a 28 year old woman looking to meet men between the ages of 30 and 42.
View Profile
L123
I'm a 33 year old woman looking to meet men between the ages of 32 and 39.
View Profile
GypseyTraveller
I'm a 54 year old woman looking to meet men between the ages of 49 and 58.
View Profile
Hopeful_dreamer
I'm a 37 year old woman looking to meet men between the ages of 33 and 45.
View Profile
recently40
I'm a 40 year old woman looking to meet men between the ages of 27 and 58.
View Profile
Smurfette
I'm a 36 year old woman looking to meet men between the ages of 25 and 45.
View Profile
optimistic_36
I'm a 37 year old woman looking to meet men between the ages of 32 and 46.
View Profile
BMull08
I'm a 19 year old woman looking to meet men between the ages of 19 and 30.
View Profile
Caroline_
I'm a 30 year old woman looking to meet men between the ages of 26 and 36.
View Profile
Plattelandsenooi3
I'm a 32 year old woman looking to meet men between the ages of 33 and 45.
View Profile
FoXyLaDy444
I'm a 56 year old woman looking to meet men between the ages of 50 and 65.
View Profile
Rosesandlace
I'm a 49 year old woman looking to meet men between the ages of 49 and 53.
View Profile
MissSM
I'm a 31 year old woman looking to meet men between the ages of 29 and 39.
View Profile
Enkellopende
I'm a 42 year old woman looking to meet men between the ages of 35 and 43.
View Profile
Doeksa
I'm a 33 year old woman looking to meet men between the ages of 33 and 39.
View Profile
Persephone101
I'm a 31 year old woman looking to meet men between the ages of 25 and 45.
View Profile
JustChat76
I'm a 38 year old woman looking to meet men between the ages of 35 and 45.
View Profile
Chriz_1985
I'm a 29 year old woman looking to meet men between the ages of 18 and 100.
View Profile
007Bee
I'm a 29 year old woman looking to meet men between the ages of 25 and 45.
View Profile
ContagiousLaughter
I'm a 41 year old woman looking to meet men between the ages of 36 and 44.
View Profile
Jenny84
I'm a 30 year old woman looking to meet men between the ages of 33 and 40.
View Profile
RobzMolecule
I'm a 24 year old woman looking to meet men between the ages of 22 and 30.
View Profile
MTBGirl_11
I'm a 42 year old woman looking to meet men between the ages of 40 and 50.
View Profile
Kelbels0201
I'm a 34 year old woman looking to meet men between the ages of 36 and 42.
View Profile
Blu
I'm a 28 year old woman looking to meet men between the ages of 27 and 33.
View Profile
Butterfly_effect
I'm a 38 year old woman looking to meet men between the ages of 36 and 48.
View Profile
Angdt
I'm a 21 year old woman looking to meet men between the ages of 23 and 30.
View Profile
Leigh1979
I'm a 35 year old woman looking to meet men between the ages of 29 and 40.
View Profile
Bastet_11
I'm a 43 year old woman looking to meet men between the ages of 45 and 48.
View Profile
JULIET_001
I'm a 51 year old woman looking to meet men between the ages of 49 and 63.
View Profile
tigerlady28
I'm a 30 year old woman looking to meet men between the ages of 22 and 34.
View Profile
Dee37
I'm a 38 year old woman looking to meet men between the ages of 38 and 45.
View Profile
HartjievanHoneydew
I'm a 21 year old woman looking to meet men between the ages of 18 and 100.
View Profile
nirina
I'm a 37 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Takingtime
I'm a 49 year old woman looking to meet men between the ages of 45 and 58.
View Profile
Teleporter1612
I'm a 48 year old woman looking to meet men between the ages of 43 and 100.
View Profile
JillieB
I'm a 61 year old woman looking to meet men between the ages of 55 and 70.
View Profile
LimitlessSoul
I'm a 45 year old woman looking to meet men between the ages of 40 and 50.
View Profile
0044MJM
I'm a 49 year old woman looking to meet men between the ages of 48 and 61.
View Profile
HenrietteF
I'm a 32 year old woman looking to meet men between the ages of 30 and 42.
View Profile
Mo1979
I'm a 35 year old woman looking to meet men between the ages of 29 and 43.
View Profile
Bruce_308
I'm a 47 year old man looking to meet women between the ages of 41 and 70.
View Profile
contour
I'm a 43 year old man looking to meet women between the ages of 34 and 39.
View Profile
Denali
I'm a 45 year old man looking to meet women between the ages of 25 and 40.
View Profile
Firefox_771
I'm a 63 year old man looking to meet women between the ages of 42 and 56.
View Profile
LiveLifeAlways
I'm a 43 year old man looking to meet women between the ages of 33 and 41.
View Profile
sunset22
I'm a 50 year old man looking to meet women between the ages of 40 and 57.
View Profile
daniel101
I'm a 44 year old man looking to meet women between the ages of 32 and 38.
View Profile
Propriety
I'm a 56 year old man looking to meet women between the ages of 35 and 45.
View Profile
philip_unplugged514
I'm a 62 year old man looking to meet women between the ages of 50 and 68.
View Profile
SingleNSearching60
I'm a 60 year old man looking to meet women between the ages of 55 and 70.
View Profile
Tall_fun
I'm a 45 year old man looking to meet women between the ages of 30 and 45.
View Profile
Fitwithhealth
I'm a 72 year old man looking to meet women between the ages of 48 and 65.
View Profile
wiedahunk
I'm a 57 year old man looking to meet women between the ages of 50 and 70.
View Profile
rjscm
I'm a 48 year old man looking to meet women between the ages of 30 and 45.
View Profile
BENTLEY292
I'm a 45 year old man looking to meet men between the ages of 45 and 55.
View Profile
matiekat
I'm a 66 year old man looking to meet women between the ages of 50 and 68.
View Profile
tommy351
I'm a 61 year old man looking to meet women between the ages of 48 and 59.
View Profile
Dn212
I'm a 51 year old man looking to meet women between the ages of 45 and 60.
View Profile
Ironstein06
I'm a 36 year old man looking to meet women between the ages of 25 and 37.
View Profile
ClassicRocker
I'm a 52 year old man looking to meet women between the ages of 42 and 52.
View Profile
Banker009
I'm a 56 year old man looking to meet women between the ages of 34 and 46.
View Profile
VirgoMan1970
I'm a 44 year old man looking to meet women between the ages of 30 and 50.
View Profile
5star
I'm a 57 year old man looking to meet women between the ages of 40 and 55.
View Profile
JustCallMeBwana
I'm a 47 year old man looking to meet women between the ages of 25 and 49.
View Profile
jacuwig
I'm a 25 year old man looking to meet women between the ages of 20 and 25.
View Profile
Guardian_24
I'm a 41 year old man looking to meet women between the ages of 37 and 43.
View Profile
Jericho2010
I'm a 41 year old man looking to meet women between the ages of 25 and 49.
View Profile
OohCharles
I'm a 53 year old man looking to meet women between the ages of 25 and 45.
View Profile
cloudhopper
I'm a 56 year old man looking to meet women between the ages of 45 and 55.
View Profile
gentlebutcrazy
I'm a 58 year old man looking to meet women between the ages of 35 and 55.
View Profile
IanT
I'm a 48 year old man looking to meet women between the ages of 40 and 48.
View Profile
lvebird53
I'm a 54 year old man looking to meet women between the ages of 50 and 65.
View Profile
Stand64
I'm a 50 year old man looking to meet women between the ages of 36 and 55.
View Profile
pinsnow
I'm a 55 year old man looking to meet women between the ages of 45 and 65.
View Profile
versl_550
I'm a 55 year old man looking to meet women between the ages of 45 and 60.
View Profile
Lonomor
I'm a 46 year old man looking to meet women between the ages of 25 and 35.
View Profile
Suidwester27
I'm a 53 year old man looking to meet women between the ages of 35 and 50.
View Profile
cknneth111
I'm a 46 year old man looking to meet women between the ages of 41 and 70.
View Profile
Smartboy_102
I'm a 60 year old man looking to meet women between the ages of 47 and 57.
View Profile
cornrlius205
I'm a 46 year old man looking to meet women between the ages of 25 and 50.
View Profile
CL4ptp
I'm a 28 year old man looking to meet women between the ages of 22 and 28.
View Profile
TheRealMrRight
I'm a 43 year old man looking to meet women between the ages of 28 and 42.
View Profile
koolstoof55
I'm a 59 year old man looking to meet women between the ages of 45 and 63.
View Profile
kannieworrynie
I'm a 56 year old man looking to meet women between the ages of 45 and 55.
View Profile
Ryno_56
I'm a 26 year old man looking to meet women between the ages of 18 and 34.
View Profile
Agent_K1
I'm a 46 year old man looking to meet women between the ages of 38 and 40.
View Profile
Dazz7605
I'm a 38 year old man looking to meet women between the ages of 25 and 44.
View Profile
Andy_Leo
I'm a 46 year old man looking to meet women between the ages of 25 and 45.
View Profile
charl1906
I'm a 57 year old man looking to meet women between the ages of 49 and 53.
View Profile
DJStarglance
I'm a 52 year old man looking to meet women between the ages of 18 and 100.
View Profile
cccdovy
I'm a 56 year old man looking to meet women between the ages of 48 and 56.
View Profile
richy10
I'm a 57 year old man looking to meet women between the ages of 49 and 70.
View Profile
Ons2alleen
I'm a 30 year old man looking to meet women between the ages of 24 and 29.
View Profile
Bryn
I'm a 41 year old man looking to meet women between the ages of 20 and 55.
View Profile
Natureboykie
I'm a 60 year old man looking to meet women between the ages of 43 and 64.
View Profile
breeze001
I'm a 49 year old man looking to meet women between the ages of 40 and 55.
View Profile
stumpjumper
I'm a 54 year old man looking to meet women between the ages of 40 and 50.
View Profile
IrishBoy11
I'm a 45 year old man looking to meet women between the ages of 27 and 40.
View Profile
LovingSerenity
I'm a 38 year old man looking to meet women between the ages of 24 and 45.
View Profile
Officer_Gentleman
I'm a 46 year old man looking to meet women between the ages of 35 and 48.
View Profile
Fred58
I'm a 56 year old man looking to meet women between the ages of 18 and 100.
View Profile
goldenhat
I'm a 52 year old man looking to meet women between the ages of 36 and 66.
View Profile
BossMorne
I'm a 43 year old man looking to meet women between the ages of 25 and 45.
View Profile
ekke_706
I'm a 50 year old man looking to meet women between the ages of 40 and 55.
View Profile
plodof
I'm a 58 year old man looking to meet women between the ages of 35 and 55.
View Profile
henisright
I'm a 50 year old man looking to meet women between the ages of 37 and 53.
View Profile
freddic1
I'm a 52 year old man looking to meet women between the ages of 47 and 55.
View Profile
HappyEnding
I'm a 49 year old man looking to meet women between the ages of 36 and 45.
View Profile
naughty_sporty
I'm a 41 year old man looking to meet women between the ages of 35 and 45.
View Profile
Alachison
I'm a 46 year old man looking to meet women between the ages of 30 and 45.
View Profile
Gambino_Family
I'm a 59 year old man looking to meet women between the ages of 42 and 70.
View Profile
pieterl
I'm a 59 year old man looking to meet women between the ages of 45 and 62.
View Profile
MLACOME0147
I'm a 55 year old man looking to meet women between the ages of 49 and 79.
View Profile
JPretoria
I'm a 38 year old man looking to meet women between the ages of 28 and 40.
View Profile
ScottRanger1987
I'm a 27 year old man looking to meet women between the ages of 18 and 30.
View Profile
TripleJ94
I'm a 20 year old man looking to meet men and women between the ages of 18 and 30.
View Profile
brightday111
I'm a 55 year old man looking to meet women between the ages of 48 and 59.
View Profile
Lovelyn111
I'm a 53 year old man looking to meet women between the ages of 51 and 63.
View Profile
Marius_P
I'm a 40 year old man looking to meet women between the ages of 30 and 55.
View Profile
Natural123
I'm a 52 year old man looking to meet women between the ages of 35 and 45.
View Profile
gavinzn
I'm a 57 year old man looking to meet women between the ages of 50 and 57.
View Profile
DutchDelight_
I'm a 45 year old man looking to meet women between the ages of 30 and 46.
View Profile
George5911
I'm a 55 year old man looking to meet women between the ages of 36 and 50.
View Profile
captainkid
I'm a 55 year old man looking to meet women between the ages of 47 and 56.
View Profile
Kitchenslave
I'm a 52 year old man looking to meet women between the ages of 35 and 50.
View Profile
TallDreamer
I'm a 37 year old man looking to meet women between the ages of 28 and 38.
View Profile
FamilyMan72
I'm a 42 year old man looking to meet women between the ages of 30 and 43.
View Profile
dinnerfortwo
I'm a 54 year old man looking to meet women between the ages of 40 and 50.
View Profile
karooboertjie15
I'm a 40 year old man looking to meet women between the ages of 25 and 40.
View Profile
TLS11
I'm a 53 year old man looking to meet women between the ages of 40 and 57.
View Profile
BobTheExtremeBuilder
I'm a 47 year old man looking to meet women between the ages of 25 and 47.
View Profile
Coolfun
I'm a 52 year old man looking to meet men between the ages of 35 and 55.
View Profile
DaveB_791
I'm a 49 year old man looking to meet women between the ages of 35 and 45.
View Profile
Lastgreatwhite
I'm a 56 year old man looking to meet women between the ages of 40 and 50.
View Profile
CDolf
I'm a 30 year old man looking to meet women between the ages of 25 and 33.
View Profile
TheDuke_99
I'm a 36 year old man looking to meet women between the ages of 28 and 42.
View Profile
Kiwiana
I'm a 39 year old man looking to meet women between the ages of 25 and 39.
View Profile
KTM1190A
I'm a 59 year old man looking to meet women between the ages of 50 and 58.
View Profile
6s6s6s
I'm a 43 year old man looking to meet women between the ages of 25 and 45.
View Profile

Business Directory