James Moore: Party-poopers are at the door of this deal but there's more work to be done yet
Outlook Will the marriage of Xstrata and Glencore ever be consummated? Not if Standard Life and Schroders get their way. The mega-deal between the two resources giants might have the City beside itself with excitement but it didn't stop the latter two from playing party-poopers yesterday. They're not at all happy with the dowry for Xstrata, the bride.
Their threat to vote down the deal probably makes them about as popular as used subprime mortgages in financial circles. An awful lot of people have been invited to a very expensive wedding party.
But, say Standard and Schroders, we don't think that Xstrata's shareholders are getting enough.
It used to be the case that a deal would be announced and an extraordinary general meeting called before institutional shareholders would dutifully send in their yes votes.
At long last this is changing. In the past couple of years investors have torpedoed Prudential's vainglorious bid for Asian insurer AIA before moving on to steal away the attempt by security services group G4S to buy Danish facilities management company ISS.
Standard and Schroders still need others' help to do that here. But Glencore can't vote its shareholding in Xstrata so only 16 per cent of the shareholders need to be in the "no" camp (the merger is being accomplished via a scheme of arrangement requiring 75 per cent support).
The activism is welcome. Deals tend to be much better for the City than they are for shareholders, who suffer the financial consequences of their all-too-frequent failure.
And with close scrutiny being paid to the institutions' tepid response to ever more outrageous executive pay settlements, perhaps it shouldn't surprise us. Institutions seem finally to have realised that they are going to have to take their role as "stewards" of the companies they own seriously.
If the deal does go through (and there are still regulators to worry about), the two fund managers might like to return to the issue of pay.
Xstrata's chief executive Mick Davis and Glencore boss Ivan Glasenberg, soon to be his co-chief executive, sorry deputy, are being promised barnstorming packages to "incentivise" them to make the deal they have created and seem to want as much as anyone work. Given that they too will be big shareholders in the combined group, shouldn't that be incentive enough? It's a question investors should be asking.
- 1 Is this bridge haunted by the ghost of nu rave?
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 The day I starred in Only Fools and Horses
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Is this bridge haunted by the ghost of nu rave?
Saudi Arabia says it won't rule out building nuclear weapons
Germanwings plane crash: Andreas Lubitz 'had eyesight problems' and woke from nightmares 'screaming we’re going down'
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
The West has it totally wrong on Lee Kuan Yew
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...