Glencore-Xstrata re-rating to start in boardroom 30 Nov 2012 With the Xstrata takeover done, the market has work to do to get to grips with “Glenstrata”. Valuing the miner-trader is tricky. The shares look cheap, but a big integration looms. A re-rating depends on the trading business proving itself and the board getting governance right.
New Glenstrata chair faces big repair job 20 Nov 2012 Xstrata chairman John Bond is going after shareholders approved Glencore’s $31 bln takeover, but snubbed the board in a complicated vote. His successor needs a forceful personality. Glencore fluffed the chance to get a strong chairman before its float. Now is the time to fix it.
Qatar dodges shareholder duty on Glenstrata 19 Nov 2012 The emirate may be confident of Glencore’s ability to retain Xstrata’s top talent. But abstaining from the vote on retention bonuses in the merger after pushing aggressively for better terms leaves a job half done and makes the sovereign fund look inconsistent at best.
"No" vote on Glenstrata pay creates little value 15 Nov 2012 Glencore’s $32 bln Xstrata offer will probably succeed now lead shareholder Qatar is backing it. A $220 mln retention plan for top staff may fail. But paying up to keep talent, while unpalatable, makes sense. The enlarged company will struggle to hold on to the savings.
Anglo needs a dealmaker CEO to unlock value 14 Nov 2012 It may be tempting to replace Cynthia Carroll with an operational obsessive who can deliver big projects. That’s one area where the outgoing boss struggled. But the miner really needs a visionary who can make tough calls, like demerging platinum and finding a buyer for the rest.
Lonmin doesn’t have to surrender to Xstrata – yet 9 Nov 2012 The big platinum miner spurned 25 pct owner Xstrata’s demand for management change in return for backing its $817 mln rights issue. It can afford to, for now: the fundraising is underwritten and Xstrata is probably loath to be diluted. But after this battle, Lonmin faces a war.
Cynthia Carroll’s departure won’t fix Anglo 26 Oct 2012 After years of sub-par returns, Anglo American and its chief exec are parting ways. Carroll’s early missteps hurt, but she did deliver needed cultural change. Her successor may gain from more industry experience, but Anglo’s largest problems are mostly out of management’s control.
Bumi should grit teeth and engage with Bakries 11 Oct 2012 The troubled acquisition vehicle has a rescue bid of sorts from its Indonesian backers. The Bakries would cancel their holding in return for a stake in coal assets they sold to Bumi last year. It’s awkward in every sense. But the Bumi board has to maximize value and should talk.
No easy fix for South Africa platinum crisis 4 Oct 2012 Striking miners want higher pay for dangerous work. But current prices are too low for the industry to pay up. Cutting production would help, but platinum mines are deep and expensive to shut. Firing workers is political dynamite. So the crisis drags on.
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.
Bumi fiasco shows danger of bad incentives in M&A 28 Sep 2012 Whatever the truth behind alleged financial irregularities at the Indonesian coal miner, Bumi’s woes raise questions about the incentives that drove Nat Rothschild and other big names in finance to migrate the emerging-market miner to London. Merge in haste, repent at leisure.
Sunshine may only be partial disinfectant for Bumi 25 Sep 2012 An investigation instigated by independent directors could see a governance revamp at the troubled UK-listed miner. But that won’t tackle the fundamental problem, the fact that Bumi’s main asset is a minority holding that now looks more like a bombed-out financial investment.
Bumi reputational damage will spread far and wide 24 Sep 2012 The mining-focused acquisition vehicle has tumbled in value amid alleged financial irregularities in its Indonesian assets. A lack of information makes the shares hard to touch right now. And whatever the final financial fallout, the affair rubs off badly on the London market.
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.
Escalating platinum strife needs political fix 12 Sep 2012 Spreading labour unrest has forced Anglo American to halt platinum production at big mines in South Africa. Angry unions’ wage demands cannot be met without cutting jobs or closing duff digs. But that’ll inflame tensions. Miners need government help to break the impasse.
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.