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
BOTSHELOMAN
I'm a 32 year old woman looking to meet men between the ages of 35 and 42.
View Profile
curvalicious
I'm a 30 year old woman looking to meet men between the ages of 25 and 45.
View Profile
hlehle888
I'm a 41 year old woman looking to meet men between the ages of 45 and 50.
View Profile
Bathandwa83
I'm a 31 year old woman looking to meet men between the ages of 31 and 47.
View Profile
Ticom_199
I'm a 29 year old woman looking to meet men between the ages of 29 and 45.
View Profile
TABIEE
I'm a 29 year old woman looking to meet men between the ages of 40 and 100.
View Profile
LavishT
I'm a 21 year old woman looking to meet men and women between the ages of 25 and 27.
View Profile
honeybee_036
I'm a 25 year old woman looking to meet men between the ages of 25 and 50.
View Profile
SexLips
I'm a 26 year old woman looking to meet men between the ages of 25 and 45.
View Profile
LadyJimpster
I'm a 23 year old woman looking to meet men between the ages of 22 and 28.
View Profile
kafze
I'm a 29 year old woman looking to meet men between the ages of 29 and 45.
View Profile
RealBlackPearl
I'm a 22 year old woman looking to meet men between the ages of 25 and 35.
View Profile
Foxy88
I'm a 22 year old woman looking to meet men between the ages of 25 and 33.
View Profile
samke_722
I'm a 22 year old woman looking to meet men between the ages of 22 and 25.
View Profile
nwaolisa
I'm a 31 year old woman looking to meet men between the ages of 32 and 41.
View Profile
maria8022
I'm a 34 year old woman looking to meet men between the ages of 40 and 60.
View Profile
Yahoo
I'm a 42 year old woman looking to meet men between the ages of 41 and 60.
View Profile
FanceFace
I'm a 27 year old woman looking to meet men between the ages of 28 and 45.
View Profile
MASESHIA
I'm a 28 year old woman looking to meet men between the ages of 27 and 40.
View Profile
ally_charmy80
I'm a 34 year old woman looking to meet men between the ages of 40 and 55.
View Profile
Mbaliholysexyness
I'm a 19 year old woman looking to meet men between the ages of 19 and 27.
View Profile
TT200
I'm a 25 year old woman looking to meet men between the ages of 25 and 35.
View Profile
Cyndilouper
I'm a 35 year old woman looking to meet men between the ages of 30 and 45.
View Profile
Leematt
I'm a 25 year old woman looking to meet men between the ages of 25 and 29.
View Profile
Royalness
I'm a 29 year old woman looking to meet men between the ages of 30 and 45.
View Profile
smilyz
I'm a 43 year old woman looking to meet men between the ages of 35 and 48.
View Profile
Dudutuli246
I'm a 34 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Casiopiea40
I'm a 44 year old woman looking to meet men between the ages of 35 and 50.
View Profile
vengodess
I'm a 27 year old woman looking to meet men and women between the ages of 25 and 100.
View Profile
Garnet3107
I'm a 44 year old woman looking to meet men between the ages of 35 and 45.
View Profile
Thel_89_zzz
I'm a 25 year old woman looking to meet men between the ages of 30 and 45.
View Profile
LolliCandy
I'm a 20 year old woman looking to meet men between the ages of 21 and 35.
View Profile
spesy59
I'm a 35 year old woman looking to meet men between the ages of 32 and 40.
View Profile
fiksBee
I'm a 25 year old woman looking to meet men between the ages of 26 and 40.
View Profile
Baabbygirl
I'm a 27 year old woman looking to meet men between the ages of 27 and 36.
View Profile
leez83
I'm a 31 year old woman looking to meet men between the ages of 25 and 42.
View Profile
danda100
I'm a 47 year old woman looking to meet men between the ages of 37 and 52.
View Profile
Mistry_lady
I'm a 41 year old woman looking to meet men between the ages of 35 and 45.
View Profile
simphy337
I'm a 30 year old woman looking to meet men between the ages of 35 and 45.
View Profile
kncyLuv
I'm a 28 year old woman looking to meet men between the ages of 27 and 45.
View Profile
Rosey903
I'm a 40 year old woman looking to meet men between the ages of 38 and 45.
View Profile
joocypie
I'm a 28 year old woman looking to meet men between the ages of 27 and 45.
View Profile
FiftyshadesB
I'm a 40 year old woman looking to meet men between the ages of 32 and 45.
View Profile
Melone
I'm a 27 year old woman looking to meet men between the ages of 30 and 42.
View Profile
Voicelady
I'm a 40 year old woman looking to meet men between the ages of 35 and 50.
View Profile
ntando_784
I'm a 34 year old woman looking to meet men between the ages of 40 and 50.
View Profile
Noks76
I'm a 38 year old woman looking to meet men between the ages of 37 and 45.
View Profile
mcgoyer
I'm a 26 year old woman looking to meet men between the ages of 27 and 35.
View Profile
Nola_505
I'm a 40 year old woman looking to meet men between the ages of 35 and 47.
View Profile
RareT0paz
I'm a 35 year old woman looking to meet men between the ages of 38 and 60.
View Profile
zama1zn
I'm a 37 year old woman looking to meet men between the ages of 38 and 47.
View Profile
sassyfoxylady101
I'm a 33 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Sthandwasakhesit
I'm a 29 year old woman looking to meet men between the ages of 30 and 35.
View Profile
Noxy727
I'm a 27 year old woman looking to meet men between the ages of 30 and 36.
View Profile
armor2014
I'm a 55 year old woman looking to meet men between the ages of 45 and 70.
View Profile
pumpania
I'm a 27 year old woman looking to meet men between the ages of 28 and 40.
View Profile
tkay011
I'm a 23 year old woman looking to meet women between the ages of 25 and 45.
View Profile
vicky74
I'm a 40 year old woman looking to meet men between the ages of 38 and 45.
View Profile
Sweatma72
I'm a 42 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Mag137
I'm a 60 year old woman looking to meet men between the ages of 57 and 67.
View Profile
DDeeZA
I'm a 45 year old woman looking to meet women between the ages of 19 and 50.
View Profile
mello_185
I'm a 26 year old woman looking to meet men between the ages of 25 and 60.
View Profile
marryme2014
I'm a 34 year old woman looking to meet men between the ages of 37 and 45.
View Profile
ME_JE
I'm a 43 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Curvz
I'm a 41 year old woman looking to meet men between the ages of 38 and 45.
View Profile
kgotlas
I'm a 34 year old woman looking to meet men between the ages of 30 and 45.
View Profile
ChocLatte
I'm a 44 year old woman looking to meet men between the ages of 40 and 60.
View Profile
ProVoq
I'm a 43 year old woman looking to meet men between the ages of 50 and 70.
View Profile
Zama101
I'm a 29 year old woman looking to meet men between the ages of 29 and 100.
View Profile
MeltChocolate
I'm a 35 year old woman looking to meet men between the ages of 40 and 50.
View Profile
Shazzyyyy
I'm a 29 year old woman looking to meet men between the ages of 28 and 35.
View Profile
sweetnessmgm
I'm a 26 year old woman looking to meet men between the ages of 40 and 63.
View Profile
Rivee
I'm a 24 year old woman looking to meet men between the ages of 26 and 32.
View Profile
xoxohayleyxoxo
I'm a 26 year old woman looking to meet men between the ages of 18 and 100.
View Profile
Calmine
I'm a 24 year old woman looking to meet men between the ages of 25 and 40.
View Profile
kiara_111
I'm a 24 year old woman looking to meet men between the ages of 26 and 35.
View Profile
fungi1971
I'm a 43 year old woman looking to meet men between the ages of 40 and 50.
View Profile
skati43
I'm a 43 year old woman looking to meet men between the ages of 45 and 60.
View Profile
Blaq_chic
I'm a 26 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Leratomntande
I'm a 23 year old woman looking to meet men between the ages of 25 and 30.
View Profile
lulubaby
I'm a 33 year old woman looking to meet men between the ages of 30 and 70.
View Profile
Funfoodie3012
I'm a 49 year old woman looking to meet men between the ages of 45 and 55.
View Profile
sbobo736
I'm a 27 year old woman looking to meet men between the ages of 25 and 45.
View Profile
kauwel
I'm a 40 year old woman looking to meet men between the ages of 39 and 55.
View Profile
hellena_596
I'm a 37 year old woman looking to meet men between the ages of 37 and 45.
View Profile
0cean_ntr
I'm a 38 year old woman looking to meet men between the ages of 25 and 45.
View Profile
J_Tot
I'm a 30 year old woman looking to meet men between the ages of 30 and 40.
View Profile
PrincessEdelweiss
I'm a 43 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Smashizo
I'm a 29 year old woman looking to meet men between the ages of 32 and 37.
View Profile
Dlodlolas75
I'm a 39 year old woman looking to meet men between the ages of 43 and 49.
View Profile
Roroe
I'm a 26 year old woman looking to meet men and women between the ages of 22 and 30.
View Profile
MissD123
I'm a 39 year old woman looking to meet men between the ages of 36 and 47.
View Profile
gloml66
I'm a 48 year old woman looking to meet men between the ages of 40 and 58.
View Profile
ranga322
I'm a 32 year old woman looking to meet men between the ages of 31 and 40.
View Profile
mitch09
I'm a 29 year old woman looking to meet men between the ages of 35 and 40.
View Profile
Bonwel
I'm a 30 year old woman looking to meet men between the ages of 32 and 36.
View Profile
mako_001
I'm a 35 year old woman looking to meet men between the ages of 35 and 70.
View Profile
CYAGal
I'm a 28 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Sweetlipsss627
I'm a 21 year old woman looking to meet men between the ages of 25 and 50.
View Profile
briluu
I'm a 24 year old woman looking to meet men between the ages of 27 and 37.
View Profile
Minkh
I'm a 30 year old man looking to meet women between the ages of 18 and 29.
View Profile
Mpeks
I'm a 22 year old man looking to meet women between the ages of 18 and 30.
View Profile
Smooth_Kriminal
I'm a 27 year old man looking to meet men between the ages of 25 and 45.
View Profile
Vbe2014
I'm a 37 year old man looking to meet women between the ages of 25 and 30.
View Profile
tripplekkkk
I'm a 37 year old man looking to meet women between the ages of 18 and 30.
View Profile
Siyabulela90
I'm a 24 year old man looking to meet men between the ages of 25 and 45.
View Profile
mcD
I'm a 39 year old man looking to meet women between the ages of 25 and 40.
View Profile
hawk619
I'm a 44 year old man looking to meet women between the ages of 35 and 45.
View Profile
Jabz_0
I'm a 29 year old man looking to meet women between the ages of 25 and 36.
View Profile
Gemini24
I'm a 45 year old man looking to meet women between the ages of 30 and 45.
View Profile
IceTy
I'm a 42 year old man looking to meet women between the ages of 18 and 42.
View Profile
gario
I'm a 54 year old man looking to meet women between the ages of 18 and 50.
View Profile
Wyne_
I'm a 27 year old man looking to meet women between the ages of 20 and 29.
View Profile
CoolnCalm
I'm a 35 year old man looking to meet women between the ages of 25 and 45.
View Profile
mesut909
I'm a 45 year old man looking to meet women between the ages of 25 and 55.
View Profile
choeu
I'm a 42 year old man looking to meet women between the ages of 25 and 45.
View Profile
Thulani1234
I'm a 42 year old man looking to meet women between the ages of 27 and 45.
View Profile
charged
I'm a 40 year old man looking to meet women between the ages of 25 and 35.
View Profile
Oupa0414
I'm a 29 year old man looking to meet women between the ages of 25 and 33.
View Profile
Clownstotheleftofme
I'm a 45 year old man looking to meet women between the ages of 32 and 41.
View Profile
myth909
I'm a 34 year old man looking to meet women between the ages of 25 and 45.
View Profile
JonnyBee
I'm a 26 year old man looking to meet women between the ages of 19 and 28.
View Profile
Washe
I'm a 37 year old man looking to meet women between the ages of 25 and 33.
View Profile
lookingforfunza
I'm a 36 year old man looking to meet women between the ages of 20 and 40.
View Profile
lmn4life
I'm a 37 year old man looking to meet women between the ages of 28 and 35.
View Profile
Bento1
I'm a 52 year old man looking to meet women between the ages of 38 and 50.
View Profile
Ernie_Manyesa
I'm a 32 year old man looking to meet women between the ages of 20 and 45.
View Profile
mattgeah
I'm a 31 year old man looking to meet women between the ages of 25 and 40.
View Profile
Fanzonator
I'm a 28 year old man looking to meet women between the ages of 25 and 45.
View Profile
Thamza_77
I'm a 37 year old man looking to meet women between the ages of 18 and 35.
View Profile
Lawrence218
I'm a 26 year old man looking to meet women between the ages of 25 and 39.
View Profile
Kelvin7777
I'm a 50 year old man looking to meet women between the ages of 42 and 56.
View Profile
catcher182
I'm a 22 year old man looking to meet men between the ages of 20 and 24.
View Profile
tonym
I'm a 44 year old man looking to meet women between the ages of 24 and 35.
View Profile
gothicD
I'm a 44 year old man looking to meet women between the ages of 18 and 37.
View Profile
GastFR
I'm a 39 year old man looking to meet women between the ages of 25 and 39.
View Profile
STONE_228
I'm a 42 year old man looking to meet women between the ages of 18 and 35.
View Profile
tsvoritsvoto
I'm a 27 year old man looking to meet women between the ages of 18 and 25.
View Profile
Terror000
I'm a 28 year old man looking to meet women between the ages of 25 and 45.
View Profile
Diva1308
I'm a 43 year old man looking to meet women between the ages of 18 and 100.
View Profile
TSKgosiemang
I'm a 52 year old man looking to meet women between the ages of 35 and 50.
View Profile
Ophion
I'm a 21 year old man looking to meet men between the ages of 25 and 45.
View Profile
PoundzMm
I'm a 23 year old man looking to meet women between the ages of 23 and 30.
View Profile
GD1
I'm a 70 year old man looking to meet women between the ages of 55 and 65.
View Profile
Deathrow5662
I'm a 39 year old man looking to meet women between the ages of 25 and 35.
View Profile
Siwithpie
I'm a 44 year old man looking to meet women between the ages of 23 and 45.
View Profile
Sabloma
I'm a 45 year old man looking to meet women between the ages of 20 and 35.
View Profile
TuEsDAy
I'm a 52 year old man looking to meet women between the ages of 35 and 55.
View Profile
mfhalim
I'm a 42 year old man looking to meet women between the ages of 18 and 35.
View Profile
alpha114
I'm a 34 year old man looking to meet women between the ages of 18 and 35.
View Profile
Mok_01
I'm a 42 year old man looking to meet women between the ages of 28 and 35.
View Profile
dev_xoxox52
I'm a 53 year old man looking to meet women between the ages of 41 and 65.
View Profile
Jono693
I'm a 42 year old man looking to meet women between the ages of 25 and 45.
View Profile
MGW
I'm a 62 year old man looking to meet women between the ages of 35 and 65.
View Profile
Shadra143
I'm a 22 year old man looking to meet women between the ages of 18 and 45.
View Profile
gwbyo
I'm a 41 year old man looking to meet men between the ages of 21 and 40.
View Profile
wanagetyou
I'm a 39 year old man looking to meet women between the ages of 25 and 32.
View Profile
bangstar
I'm a 22 year old man looking to meet women between the ages of 19 and 23.
View Profile
Jb24golf
I'm a 40 year old man looking to meet women between the ages of 30 and 45.
View Profile
mixido2
I'm a 39 year old man looking to meet women between the ages of 18 and 35.
View Profile
dlalo
I'm a 44 year old man looking to meet women between the ages of 18 and 100.
View Profile
shooter_949
I'm a 51 year old man looking to meet women between the ages of 20 and 50.
View Profile
Mxo87
I'm a 27 year old man looking to meet women between the ages of 18 and 30.
View Profile
Ma1010n
I'm a 26 year old man looking to meet women between the ages of 25 and 45.
View Profile
THOKZANHLA
I'm a 44 year old man looking to meet women between the ages of 25 and 44.
View Profile
Chacal
I'm a 44 year old man looking to meet women between the ages of 30 and 40.
View Profile
Satisfactor99
I'm a 37 year old man looking to meet women between the ages of 18 and 35.
View Profile
Deejay_homy
I'm a 46 year old man looking to meet women between the ages of 18 and 42.
View Profile
SSBK547P
I'm a 39 year old man looking to meet women between the ages of 18 and 30.
View Profile
bobbylava
I'm a 35 year old man looking to meet women between the ages of 18 and 31.
View Profile
sweetman465
I'm a 67 year old man looking to meet women between the ages of 48 and 62.
View Profile
Phistos_Number_1
I'm a 38 year old man looking to meet women between the ages of 30 and 40.
View Profile
Lucky123nxt
I'm a 36 year old man looking to meet women between the ages of 18 and 40.
View Profile
shiva709
I'm a 56 year old man looking to meet women between the ages of 45 and 56.
View Profile
Masterrapture
I'm a 49 year old man looking to meet women between the ages of 21 and 45.
View Profile
Rendzo
I'm a 47 year old man looking to meet women between the ages of 25 and 45.
View Profile
Dalubuhle
I'm a 27 year old man looking to meet men between the ages of 26 and 45.
View Profile
bloodmoney370
I'm a 43 year old man looking to meet women between the ages of 30 and 50.
View Profile
GWL321
I'm a 58 year old man looking to meet women between the ages of 46 and 56.
View Profile
loner729
I'm a 40 year old man looking to meet women between the ages of 25 and 45.
View Profile
Qtip
I'm a 30 year old man looking to meet women between the ages of 26 and 32.
View Profile
sbo123sss
I'm a 30 year old man looking to meet women between the ages of 25 and 45.
View Profile
dlarah
I'm a 45 year old man looking to meet women between the ages of 30 and 40.
View Profile
LIONKING915
I'm a 59 year old man looking to meet women between the ages of 38 and 50.
View Profile
Henry071
I'm a 28 year old man looking to meet women between the ages of 25 and 35.
View Profile
Seriousaboutlife325
I'm a 38 year old man looking to meet women between the ages of 18 and 100.
View Profile
Moxion
I'm a 27 year old man looking to meet women between the ages of 18 and 35.
View Profile
bigbhele
I'm a 34 year old man looking to meet women between the ages of 18 and 55.
View Profile
Eriqnes
I'm a 33 year old man looking to meet women between the ages of 21 and 35.
View Profile

Business Directory