Tough sell

21 August 2012 By Kevin Allison

Resistance to improving the terms of the $30 bln merger with Xstrata appears to be hardening at Glencore HQ. A last-minute sweetener can’t be ruled out, but a decent half-year performance by the commodity trader makes it less likely.

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Ivan Glasenberg, the chief executive Glencore, said the commodity trader’s $30 billion bid for mining group Xstrata is not a “must-do deal”, in the strongest warning yet that it may refuse bow to Xstrata shareholders’ demand for better merger terms. The comments came as Glencore reported a smaller-than-expected drop in half-year profit.
The Swiss commodity trader offered 2.8 of its shares for every Xstrata share it did not own when the merger was unveiled in February. Qatari investors, who own more than 11 percent of Xstrata, want an exchange ratio of 3.25. “We cannot understand the position of the Qataris, asking for more than the 2.8 ratio,” Glasenberg told Reuters in a telephone interview on Aug. 21. “We have seen nothing coming out of recent results that supports this, in fact we have seen quite the opposite.”

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