Glasenberg's hardball, 11th-hour tactics are brilliant or outrageous, depending on whose camp you're in. The arch-trader may be close to pulling off a coup, albeit after being forced by the Qataris to blink on price. But it's still possible that he has shot himself in the foot and the deal will collapse. Odds? Probably 70/30 that Glencore prevails: might usually does when the gloves come off in City battles.
The indisputable fact is that the Glencore boss spent seven months pursuing a friendly "merger of equals" but then threatened to turn the transaction into a takeover on the morning of the shareholder vote. He upped to 3.05 from 2.8 the number of new Glencore shares to be issued for each of Xstrata's to satisfy Qatar Holding's demand for better terms. But then – critically – he insisted on being chief executive, ripping up the original arrangement with Xstrata that Davis would be the boss.
Where's the problem, it may be asked. If Glencore is finally paying up, doesn't Glasenberg have the right to take the top job? And wasn't the original idea that he would work as Davis's deputy just a polite fiction? That's the view from the Glencore camp. But it's problematic in two ways.
First, did Glasenberg spell out to Qatar that he would insist on being chief executive? It may seem incredible that he failed to do so, but that's the claim from some in the Qatari camp. It may be a misunderstanding over the timing of Glasenberg's elevation. Or perhaps squeamishness in Qatari quarters about elbowing out Davis, whom they had previously supported publicly.
Whatever the reality, there is no way Davis will accept relegation, especially after Friday's drama. And several of his lieutenants may also depart if a takeover happens. That prospect may yet terrify the Qataris into rejecting Glencore's formal proposal.
Second, if the deal is now a cold-blooded takeover, where is the proper takeover premium? That's the question the Xstrata board asked, once it had overcome its shock. A 17% premium, it said, is "significantly lower than would be expected in a takeover". But, of course, chairman Sir John Bond is in an excruciating position. He agreed to trade the firm at a 2.8 ratio, despite objections from Qatar and several other shareholders, so it is hard now to claim that 3.05 is not enough.
Bond's position can only be squared if you accept his other argument, that it was safe for Xstrata investors to accept Glencore shares only if Xstrata managers were on hand to run the mines. That was the basis on which Bond proposed and defended the £170m retention package for Xstrata's top 80 executives. To many outsiders, the package looked greedy. But for Bond it was an essential safeguard. It is hard to see how he can now recommend Glencore's new offer and retain his (already damaged) credibility.
And if Xstrata's board won't recommend capitulation, this tale could become a lot messier. Those odds may yet change.
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