Failed China Gas bid leaves business unfinished 16 Oct 2012 Sinopec dropped its $2 billion offer for the Chinese gas supplier. As a state-owned bidder, the political sensitivities of running a hostile takeover were too great, and the market suggested the price was too low. Yet China’s fragmented gas industry still needs to consolidate.
Commodity traders face up to end of good old days 4 Oct 2012 Trading houses’ rush to diversify sources of capital and shed non-core assets partly reflects straitened financial times. But like Goldman’s decision to go public in the 1990s, it’s also about a generational shift and the need for scale in a changing economic order.
Xstrata is a warning on boards that give up value 2 Oct 2012 An acceptable deal with Glencore doesn’t exonerate the miner’s directors from charges they lack spine standing up for shareholders. The failure to push Glencore to the pain barrier sooner has roots in the same weakness that sanctioned excess pay for CEO Mick Davis time and again.
Xstrata reaches tidy compromise on messy deal 1 Oct 2012 The miner is right to back Glencore’s latest offer. It is getting a better premium from the commodity trader, plus board domination. Retentions for top staff make sense with Glencore’s Ivan Glasenberg running the show. The tie-up faces challenges, but shareholders should say yes.
Nixing China’s oil bid may create Canada discount 26 Sep 2012 The market reckons there’s a one-in-four chance politicians will scupper CNOOC’s offer for Nexen. Takeovers by state-owned companies raise tricky questions. But hoisting the Canadian flag over a company of little strategic importance risks further alienating outside investors.
Markets struggle with true values for Xstrata, BAE 20 Sep 2012 Shareholders try to find the right price in deals, but their perspective is too financial and short term. Besides, no price is right if a tie-up is basically wrong - overleveraged, undermanaged or self-destructive. Both Glencore-Xstrata and EADS-BAE might fail this basic test.
South Africa platinum crisis not over yet 19 Sep 2012 A deal between Lonmin and its striking miners might solve an immediate problem, if it holds. But it sets up other big challenges for the company and the industry. A big wage hike will hurt already weak margins. And the response may only encourage further strikes.
Fortescue buys some breathing space – at a price 18 Sep 2012 The Australian miner has refinanced $4.5 bln of debt with a five-year secured loan. That avoids breached covenants or a dilutive share issue, allowing it to benefit from past spending. Other creditors won’t like being pushed down the pecking order, but the alternative was worse.
Fortescue may get off easy for over-leveraging 17 Sep 2012 The iron-ore miner borrowed heavily to fund a spending binge on the assumption prices would stay high. Now it’s comeuppance time. The shares fell 14 pct on Sept. 13 on talks over debt covenants. But Fortescue isn’t about to run out of cash and there’s time for prices to recover.
Calculator: Market skeptical on Glencore-Xstrata 11 Sep 2012 Glencore’s new offer for Xstrata is recommendable, yet the companies’ shares are pricing in only a 60 pct chance of deal success. Uncertainty about the Qataris and anti-trust issues are big factors. But the chaotic course of the deal may have raised merger arbs’ risk aversion.
Xstrata should accept revised Glencore pitch 10 Sep 2012 The merger is now a $35.5 bln takeover at a modest premium. The tie-up is riskier since Xstrata CEO Mick Davis would exit after six months, although Chairman John Bond would stay. Xstrata investors will want more. But it’s hard to see a realistic alternative offering better value.
Glencore-Xstrata mess makes bankers look powerless 7 Sep 2012 The deal’s basic set-up proved surprisingly vulnerable. Pay squabbles wasted weeks. A rejig has now come at a comically late stage. The tie-up’s many banks may be giving duff advice; more likely, they are bit players in Ivan Glasenberg and Mick Davis’s CEO-led production.
Glenstrata drama is no way to do M&A 7 Sep 2012 Ivan Glasenberg’s curveball on Glencore-Xstrata shows bad form in deal making. Halting a shareholder vote after markets opened makes Glencore’s boss look more trader than statesman CEO. A solid deal may be imminent. But the messiness of it all should give investors pause.
Calculator: Glencore-Xstrata from first principles 31 Aug 2012 Commodity prices have dipped and the two miners have posted results since announcing the merger back in February. With Xstrata shareholders readying for a Sept. 7 vote, this calculator looks at how the deal stacks up based on estimates of each company’s fair value.
Oil’s climb raises risk of Asian stagflation 30 Aug 2012 Growth is slowing, but crude has climbed by a quarter in the past two months. That’s not good for energy-hungry Asia, which relies heavily on imports. Higher fuel costs could keep inflation high, making it more difficult for central banks to cut rates as economic growth slows.
Glenstrata deal gap is harder than ever to bridge 29 Aug 2012 Xstrata investors are digging in. Yet Glencore has less scope to up its offer after the miners’ interims. Without the retention bonus row, the obstacles may not have got so big. Xstrata’s hold-outs need to believe in its standalone value: that’s probably all they’ll be left with.
Glencore’s stiffening resolve leaves bid on skids 21 Aug 2012 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.
China’s oil giant may need pricey Canadian boost 21 Aug 2012 CNOOC’s $15 bln tilt at Canada’s Nexen seems an expensive distraction, especially since the Chinese oil major has cut its dividend, has flat output and rising costs. Yet CNOOC needs a booster. Nexen’s drilling expertise could help it squeeze more out of its domestic business.
Public investors lose in Mongol mining battle 10 Aug 2012 The nomad state seems set on sinking Chinese state firm Chalco’s bid for coal miner SouthGobi. Wild as Mongolia is, a compromise is conceivable. All sides could come away with something, except for investors who bought SouthGobi shares when they were double their current value.
Xstrata figures sustain hope for sweetened merger 7 Aug 2012 The miner’s first-half results were worse than last year, but better than expected thanks to cost cutting. The resilience may harden Xstrata shareholders’ expectations of improved merger terms from Glencore. But it is still far from a done deal.