Glasenberg pooh-poohs Anglo takeover

Speaking at his old hunting grounds in Johannesburg, Glencore (LON:GLEN) CEO Ivan Glasenberg dismissed the idea of a takeover of diversified peer Anglo-American (LON:AAL).

The question was put to Glasenberg because yesterday Mark Cutifani told the Wall Street Journal he’s open to the idea saying “if someone sees value, then there’s a conversation to be had.”

Glasenberg clearly doesn’t see any value in such a conversation; not at the moment anyway:

“With Anglo, we don’t trade diamonds, if that gives you a good idea, and we don’t trade platinum,” Glasenberg told reporters in Johannesburg today. “We will only look at assets which we trade, which we market,” he said in response to a separate question.

Anglo American CEO Mark Cutifani

Cutifani is in the process of getting rid of the South African platinum mines and Anglo’s De Beers diamond business could simply be bolted onto Glencore’s trading operations which means Glasenberg may just be unwilling to show eagerness at this point.

Anglo’s share price is up 20% this year and Glasenberg would not want it to get any more expensive under Cutifani’s cost cutting and divestment strategy.

Although there may be some anti-trust issues (and regulators, particularly in China would probably seek concessions a la Las Bambas) there are synergies and up to $1.5 billion in cost savings in a tie-up:

“Glencore would greatly increase its trading market share in some key commodity markets, including copper, coal and nickel,” [Jefferies LLC analyst Chris] LaFemina said. “Anglo would also give Glencore a strong presence in the seaborne iron ore market which we would argue is an ideal market for commodity traders.”

There’s a little bit of history of course.

Mick Davis , building new mid-tier miner with X2 Resources

Back in 2009 Xstrata floated a “merger of equals” with Anglo American, which valued the two companies at around $33 billion (not far off Anglo’s current market value and more than what Glasenberg paid for Xstrata – more evidence of the stasis in mining’s top tier).

That proposal was declared “dead and buried” even before an official bid was launched.

In hindsight South African-born Mick Davis, Xstrata’s chief executive at the time, may have fought a little harder and made the deal a little sweeter had he known that Glencore would kick him out as CEO in what turned out to be nothing like the merger of equals the Glencore deal was first billed as.

That Davis, who like Glasenberg cut his teeth in the coal trade in Johannesburg in the 1980s, was mentioned as a possible successor to Cynthia Carroll when she was ousted from Anglo in 2012 only adds spice.

Glasenberg, probably the most upbeat CEO in mining these days, summed up Cutifani’s approach as “someone’s going to take him over, he’s happy.”

If it were that simple. Just ask Mick Davis.