Mining merger criticised by leading investor
One of the City's leading institutional shareholders last night turned up the heat on the mining giants Glencore and Xstrata by voicing fresh concerns over the pair's $90bn (£57bn) merger.
Fidelity Worldwide Investment, which owns shares in both companies, said the terms of the tie-up announced on Tuesday needed to be altered to win its full backing.
The fund manager, which has played a crucial role in a string of big money mergers and takeovers, added to a chorus of investors unhappy at the deal that currently offers 2.8 Glencore shares for every Xstrata share owned.
"We support the deal in principle but we think the terms need to be revisited," a Fidelity spokesman said.
The intervention is particularly bad news for Glencore and Xstrata bosses Ivan Glasenberg and Mick Davis because Fidelity owns a significant stake in both companies. Earlier critics, Schroders and Standard Life, spoke out as Xstrata investors and have little or no exposure to Glencore. Fidelity has a 2.3 per cent stake in Glencore, the powerful commodities trader, and 1.5 per cent of Xstrata, whose assets stretch from coal and copper to nickel production.
The two companies have been on an intensive investor roadshow since the deal was announced. Glencore already owns 34 per cent of Xstrata and is unable to vote its holding on the deal. As a result, only 16.4 per cent of Xstrata's shareholders need to vote against to block it.
Xstrata shareholders are thought to be holding out for a 20 per cent premium. Under the current terms, they will receive an 8 per cent premium compared to the price of both companies before it emerged that talks were under way.
- 1 Which country would be hardest to invade?
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 4 How the language you speak changes your view of the world
- 5 Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...