Glencore threatens to walk away from Xstrata

Glasenberg resists Qatari attempts to get trader to raise £30bn offer for miner

Glencore's chief executive Ivan Glasenberg called Qatar's bluff yesterday, giving the strongest sign yet that he will not cave into its demands to hike his £30bn offer for Xstrata.

Mr Glasenberg rebutted the Qatari sovereign wealth fund's claim that Glencore's offer for Xstrata undervalued the FTSE 100 miner, saying it was not a "must-do deal".

Qatar has significantly increased its stake in Xstrata to 11.7 per cent since the deal was announced in February, making it the second-biggest shareholder after Glencore, with 35 per cent, and in effect giving it the power to block the transaction on its own.

Mr Glasenberg said he could easily walk away, spend a few years developing Glencore through alternative acquisitions and then come back to Xstrata. If it doesn't happen now it's not the end of the world. We have been trying to do the deal for the last five years.

"If it takes another year, another two years or even another five years we can revisit the deal whenever. In the meantime, no one else can do anything while we hold our 35 per cent stake in Xstrata," he said.

Asked if he was categorically ruling out a higher offer for Xstrata, Mr Glasenberg said "you will have to draw your own conclusions".

Analysts said it suggested a hardening of his – already firm – stance on the terms of the deal.

Glencore, which is primarily a commodities trader but also has a mining operation, offered 2.8 of its shares for each of Xstrata's in an agreed, all-paper deal that values the miner at about £30bn at yesterday's stock price.

However, several key shareholders have threatened to vote against the deal unless the price is increased, notably Qatar, which is calling on Glencore to increase the ratio to 3.25, or about £35bn.

Mr Glasenberg was speaking after Glencore announced a better-than-expected 26 per cent decline in first-half profits, as relatively buoyant results from its trading arm helped prop up a larger drop in its mining business. This compared favourably to Xstrata, which recently reported a 43 per cent fall in interim profits.

Mr Glasenberg said Glencore's relative outperformance further weakened Qatar's case for raising the price and emphasised that Xstrata's chief executive, Mick Davis, also agreed a ratio of 2.8 was fair.

"This is not a hostile offer. It has the backing of Xstrata's management and of its independent directors. What do the Qataris see in terms of value which Xstrata's own management does not see? Why did they become buyers only once the merger was announced? Just to block it? I don't get it," he added.

Glencore shares rose 6.25p to 360p and Xstrata's 18.6p to 926.1p.

Lonmin rights issue?

The prospect of an emergency, $1bn (£633m) rights issue by Lonmin loomed large last night after the London-listed platinum producer said that the closure of its key Marikana mine in South Africa left it likely to breach its banking covenants.

The mine has been closed for the last 12 days after a strike by 3,000 rock drillers descended into a wave of violence that has left 44 people dead.

Following a profits warning on Thursday, a Lonmin spokesman said yesterday that "the company now considers that the balance of probabilities is that the impact on the production of the current events will result in covenants being breached at the next test date on 30 September 2012".

"The company is reviewing all the options available to strengthen its financial structure, including possible access to the equity capital markets," the spokesman added.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent