Talent exodus could hurt Xstrata

The possibility that Xstrata’s managers and professionals will quit after a planned $33 billion (R278bn) takeover by Glencore International could hurt the combined firm, according to Sanford C Bernstein.

There was a “potentially negative impact upon the combined entity from the proposed loss of the strategic and operational talent that has guided Xstrata’s hitherto meteoric rise,” Paul Gait, a Sanford analyst, said yesterday. The loss could be “potentially material” to the combined group, he said.

“The departure of any (chief executive) and the inevitable attendant uncertainty as to the firm’s resulting direction is disruptive and has the potential to, in Xstrata’s case, at the very least slow down the firm’s hitherto meteoric rise. Were this to be the case, the value of Xstrata to Glencore could potentially be reduced.”

Investors would be asked to consider two resolutions; one to approve the takeover along with £144 million (R1.9bn) of retention bonuses; and a second that excluded the pay question, Xstrata said on Monday. – Bloomberg