Qatar declares its vote against Glencore – Xstrata merger

Written on:August 31, 2012
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Glencore sign board

Qatar leaves Glencore high and dry (Image Courtesy: Mendoza Economico)

Qatar Holding has openly declared for the first time that it would vote against the $70 billion the Glencore – Xstrata merger, while deciding not to restate its terms for the deal of 3.25 shares in the commodities trader for each of the miner.

Qatar had made its stance clear to Glencore in June when it said that the commodity trader could count it out, if the deal was below the 3.25 ratio. Qatar has clarified that it would continue to buy Xstrata shares, while staunchly disapproving the terms of the merger deal. However, it said that it continues to support the merger “in principle.”

Mark Kelly, of Olivetree Securities, said, “They are really saying: ‘We want the merger but at a better price than 2.8’. The lack of mention of 3.25 suggests to us Qatar could be willing to accept a lower price.”

Referring to the 3.25 ratio that the Qatar fund had quoted, Glencore CEO Ivan Glasenberg said, “I have no idea where that number comes from or how you justify that number.”

Sources close to the companies have observed that there have been no negotiations or talks between the two, dashing all last minute hopes of any dramatic change to occur.

But Glencore is unlikely to give up on the deal as it is bound by the agreement to have to pay a £298 million fee to Xstrata, in case it backs out of the deal. This leaves no choice for Glencore apart from accepting terms of majority of shareholders, since it is not eligible to vote on the deal.

The Glencore-Xstrata merger aims to redesign the natural resources industry by combining Xstrata’s production of copper, coal, zinc and nickel with Glencore’s marketing machine.

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Glencore decides to “move on” if Qatar blocks Xstrata merger


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