LONDON--Commodities titan Glencore International (GLEN.LN) is
willing to walk away from its proposed merger of equals with
Xstrata PLC (XTA.LN) as it continues to wrangle with some of
Xstrata's largest shareholders about what is the right value for
the deal.
"It's not a must-do deal," Glencore's Chief Executive Ivan
Glasenberg told Dow Jones Newswires in a call. "If we don't do it
now, we can do it in the future," he added. Mr. Glasenberg,
Glencore's largest shareholder, has been championing a merger with
the global diversified miner Xstrata for five years. The deal, if
completed, would create the world's fourth largest diversified
miner with a market capitalization of about $66 billion.
The deal, however, is in danger of collapsing after sovereign
wealth fund, Qatar Holding LLC, Xstrata's second largest
shareholder after Glencore with an 11.8% stake, surprised market
participants in June by calling on Glencore to raise its offer to
3.25 Glencore shares for every Xstrata share, up from the current
2.8 level.
Mr. Glasenberg said he couldn't understand how the Qataris or
any other shareholder could argue with the 2.8 share swap ratio.
"I've seen nothing from any investors or shareholders....No one has
given me any substantive figures' that would back the 3.25 ratio,
he said. He added that even Xstrata's board of directors, which
recommended the offer, recognizes that 2.8 is a good deal.
Qatar Holding, alongside another five shareholders who also
believe the current share swap ratio isn't attractive enough, own a
combined 15.8% of Xstrata's shares. Under the terms of the merger
proposal, just over 16% of Xstrata's shareholder base need to vote
against the deal on Sept. 7 in order to block it.
-Write to Alex MacDonald at alex.macdonald@dowjones.com
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