The Stock Exchanges seem to have decided: the marriage of the year, the one between the number one in trading, Glencore International, and the world's fifth largest mining group, Xstrata, will end in shipwreck just a few steps from the altar. Glencore, the London-listed multinational with headquarters in Switzerland, has no plans to increase its offer by $33 billion (in shares), even as the Xstrata shareholder vote approaches (slated for September 7) and even if the statements of Qatar Holding, of the fund sThe Norwegian government and the American fund Knight Vinke Asset Management leave little room for escape: Glencore already has 34% of Xstrata and British regulations prescribe that the merger has the go-ahead if it obtains the adhesion of 75% of the remaining votes.
To block everything, it is enough for less than 17% of Xstrata shareholders to vote against, exactly 16,48%. The Qatari sovereign wealth fund raised its stake to 12% in recent months and has since continued to insist that the fair exchange is not 2,8 Glencore shares for one Xstrata share, but 3,25. The half-year financial statements of the two groups, on the other hand, agree, albeit indirectly, with Ivan Glasenberg, the 55-year-old billionaire CEO of Glencore, who does not intend to modify the offer. AND the stock exchange, for several days, has been saying that it no longer believes that the operation will take place: In fact, Xstrata is well below the value of 2,8 Glencore stocks. Will this response be enough to change the intentions of those who oppose the agreement? Or will Glasenberg, Glencore's largest shareholder with 15,7%, change his proposal at the last minute to facilitate a positive solution? At the moment it would seem that we have to answer no to both questions.
The only opening identified by observers close to the Swiss trading company is a hostile takeover, which however seems difficult to implement and in the end would be more expensive than a mediation that brings the offer to 3 Glencore shares for an Xstrata. The mining company led by Mick Davis, also headquartered in Switzerland, can actually grow on its own. It is already the world's leading exporter of thermal coal and the leading producer of zinc ore, as well as having strong productions of copper and nickel. It also boasts a stake in Lonmin, the world's third largest producer of platinum, a company which is currently experiencing serious problems following the unrest in the large Marikana mine in South Africa, where the police repression claimed at least 44 lives and raised the specter of apartheid.
This could be the right moment for Davis to try to complete the acquisition. less suitable market and the operation would perhaps prove more expensive than it is now. In the City these days Xstrata fluctuates around 2,48-2,51 times the Glencore share, precisely suggesting that the operators do not believe that the offer will go through, nor that it has improved in extremis. A failure would not be a drama for Xstrata, but neither would it be for Glencore. Glasenberg's company has important mining properties and trades in coal, oil, all types of commodities, ships and warehouses. "If the deal is not accepted - says Glasenberg - the world will go on anyway".
