In a shocking twist to the Glencore-Xstrata merger deal, Glencore has rejected Qatar Holdings’ condition to better the terms for the tie-up, and has gone on record to state that the deal with Xstrata is “not a must-do”, suggesting that Glencore seems ready to move on.
Ivan Glasenberg, Glencore’s chief executive, said that he would not upset shareholders by overpaying for Xstrata, adding that it was not a “must-do deal.” The warning came as the world’s largest commodities trader delivered better than expected results for the first half of the year, further strengthening its ground on the battle for the control of the mining group.
Glasenberg added that he was surprised with the position held by Qatar Holdings which has pushed the merger to the brink of collapse by building a stake of 11.88% in Xstrata and demanding that Glencore increases its offer from 2.8 shares for each Xstrata share to 3.25 shares.
Glencore’s chief executive also gave no hint that the company would raise its $26 billion bid. The talks between Glasenberg and Ahmad Mohamed Al-Sayed, head of Qatar Holding, have not yet yielded any result and investors expect the deal would collapse ahead of an Xstrata shareholder meeting called for early September.
Glencore owns 34% of Xstrata, but will be unable to vote on the merger, which requires a 75% majority of all those entitled to vote. This means just 16.5% of the total Xstrata shareholder base voting against a deal could scrap the deal.