Glencore Xstrata CEO eyes cuts to forge success
LONDON (Reuters) - Glencore Xstrata (GLEN.L) chief executive said on Friday the group's ability to slash costs and cut jobs in Xstrata's network of divisional offices would determine the success of the industry's largest takeover to date.
"If we can cut costs enough, get rid of these corporate head offices, we can cut a lot of fat out of the system. These synergies and overhead reductions - that figure can ensure this merger is a success," Ivan Glasenberg said in an interview.
"The target of $500 million is only the synergies on the trading operations. When we came up with that figure we had no idea what the overheads were in Xstrata... and it wasn't a takeover at that time."
Glasenberg said Xstrata itself had estimated it could cut $300 million in overheads, on top of trading savings.
Glencore - which made its debut as a combined company on the London market on Friday - is expected by analysts to beat its savings goal with final synergies worth at least double the initial amount.
Glencore could also sell non-core assets, though Glasenberg said it would sell only mines and projects "sucking money" out of the business. It has not yet begun the sales process for Las Bambas, the Peruvian copper mine it will have to divest to appease Chinese regulators - but expects Chinese interest.
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