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In an 11th hour and last ditch attempt to save the resource sector’s biggest deal from collapse, Swiss commodities trader Glencore on Friday upped its offer for diversified miner Xstrata.
Glencore, which already owns 34% of fellow Switzerland-based Xstrata, is now offering 3.05 new shares for every Xstrata share it does not already own, up from a ratio of 2.8 before valuing the deal at $80 billion.
The sweetened offer comes in the wake of opposition by major institutional shareholders – particularly the gas-rich nation of Qatar – who said the terms undervalues Xstrata.
FT.com reports Tony Blair, the former UK primer minister “turned high-flying consultant, helped to bring together [Glencore CEO, Ivan] Glasenberg and Hamad bin Jassim al-Thani, the Qatari prime minister who in a rare move took personal control of the negotiations from the executives of the emirate’s sovereign wealth fund.”
As part of the revised deal Glasenberg (pictured above), will lead the combined company and not current Xstrata CEO Mick Davis (pictured on the right), who was earlier slated to lead a post-merger ‘Glenstrata’.
Reuters reports “the role for Davis and his team, if any, in the future company is unclear under Friday’s proposal, and the change could draw an end to the South African manager’s career at Xstrata after a decade at the top. Looking tense and tired at Xstrata’s shareholder meeting, Davis declined to comment on his plans.”
With revenues in excess of $200 billion Glenstrata, as it has been dubbed, would become the 4th largest miner on the planet with Xstrata’s current management responsible for over 80% of the combined group’s earnings, 150 mining and metallurgical assets and 20 major growth projects.
Xstrata is the world’s biggest exporter of thermal coal and the fourth-largest copper producer and under Davis has gone from having a fewer than 2,500 employees to a workforce exceeding 70,000 in 20 countries.
Even before building up Xstrata through a series of billion dollar transactions, Davis was a formidable dealmaker who with fellow South African Brian Gilbertson created Billiton. Davis left for Xstrata after Billiton was sold to BHP in 2001.
Glasenberg – number 20 on the list of mining’s richest with an estimated fortune of $6.8 billion – and Davis both cut their teeth in South Africa’s coal industry in the 1980s and are keen sportsmen (Davis is a cricket fanatic; Glasenberg a competitive race walker) and are known for 70-hour workweeks.
Back in February shortly after the announcement of the offer The Australian wrote this about Glasenberg:
Mining industry legend has it that when Glencore’s Ivan Glasenberg does a deal with you, you can be certain about two things: he will stick to it and it will be a bad deal for you.
His legendary deal-making skill explain why he is worth some $5 billion and his old schooldays chum, Xstrata’s Mick Davis, is leery about accepting his proposed takeover.
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Image of Mick Davis is from a 2011 video capture.
Image of Glasenberg by International Students’ Committee
