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Glencore Xstrata deal in disarray

Tuesday, June 26, 2012 - 01:42

June 27 - Commodities trader Glencore will need to sweeten its $26 billion bid for miner Xstrata or risk losing a deal it has coveted for years after key shareholder Qatar made a late demand for better terms. Sonia Legg reports.

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Many thought the deal was as good as done but it seems Glencore's bid to merge with mining giant Xstrata is back on the drawing board. Qatar - a key shareholder - says it will oppose the commodity trader's current $26 billion bid. It wants Glencore to offer 3.25 new shares for every Xstrata share instead of 2.8. Richard Hunter is from Hargreaves Lansdown. (SOUNDBITE) (English): Richard Hunter, Hargreaves Lansdown, saying: "The first thing we expect them to do is to sweeten the deal in its current format, although they will have in their own minds an absolute top price. It's a question of how much they want to pay for the next 20 - 30 years of potential growth." Glencore made its move for Xstrata in February. Analysts had expected the initial offer to increase shortly afterwards. But with thermal coal prices falling Glencore stuck to its guns. Many now expect a compromise as neither side in the deal wants it to fail. Glencore's reputation as a dealmaker is under threat and there is a possibility, say some, that the position of CEO Mick Davis, is too. (SOUNDBITE) (English): Richard Hunter, Hargreaves Lansdown, saying: "It's very possible - obviously that will be a further line of instability should that happen - any potential of changes at the top has the potential for the board taking their eye off the ball in the court which is obviously particularly challenging." Glencore has until Thursday to alter the terms of the deal without having to change the dates of the shareholder votes . Many believe that time frame is too tight. Sonia Legg, Reuters.

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Glencore Xstrata deal in disarray

Tuesday, June 26, 2012 - 01:42