LONDON--A fund manager for Schroder Investment Management Ltd.
rejected the latest Glencore International PLC (GLEN.LN) offer for
Xstrata PLC (XTA.LN) on the grounds it didn't represent a large
enough premium--although he conceded that the deal seems to be
garnering sufficient support among other Xstrata shareholders to be
approved.
"I will still vote against the deal," said the head of U.K.
equities at Schroder Investment Management Ltd, a top 20 Xstrata
shareholder with around a 1% stake. But it "seems like a done deal"
based on reactions from some Xstrata shareholders to the new terms,
he said.
Glencore Monday confirmed that it has increased its all-share
offer for Xstrata to 3.05 Glencore shares for every Xstrata share
in a last-ditch effort to save the deal from collapse. The deal has
faced mounting opposition from some of Xstrata's largest
shareholders after Qatar Holding LLC, Xstrata's second-largest
shareholder with a 12% stake, said it would vote against the deal
at the original 2.8 share swap ratio.
Glencore and Xstrata have been seeking shareholder and
regulatory approval since February for a tie-up to create a mining
juggernaut with a combined market capitalization of more than $70
billion based on current share prices.
Mr. Buxton said he believes 3.5 to be a more appropriate
valuation for Xstrata although he said he would have settled for
3.25. "I'm not remotely happily" about the new offer, he said.
Glencore CEO Ivan Glasenberg and largest shareholder "still got us
on the cheap," he added.
Mr. Buxton said he wouldn't sell out of his holding in Xstrata
ahead of a potential vote on the deal as he believes the entire
mining sector is undervalued and will rally in the future.
Xstrata's board is due to decide on whether to recommend the deal
to shareholders on Sept. 24. If the board decides to recommend the
deal, it will then set a new date for a vote.
Activist fund Knight Vinke Asset Management LLC, which owns
about a 0.5% stake in Xstrata, also rejected Glencore's increased
offer on the grounds it wasn't sufficient. However Standard Life
Investments Ltd., the seventh-largest Xstrata shareholder with a
1.42% stake, said it was supportive of the new offer. Qatar
Holding, which could potentially block the deal on its own
depending on the level of absenteeism, said it hasn't yet made a
decision.
Write to Alex MacDonald at alex.macdonald@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires