Agnelli's charisma, deal-making skills and authoritarian style transform Vale

Former investment banker Roger Agnelli used his nose for great deals, capital markets experience, charisma, aggressiveness and authoritarian style to transform the former CVRD into Vale, considered a global powerhouse in international mining.

RIO DE JANEIRO (Reuters) -

When Roger Agnelli was structuring merger and acquisition deals in the 1990s as a young Brazilian investment banker, few would have imagined he would end up steering one of the world's top mining companies from one international takeover to another.

And that's simply because it was hard to picture Brazil's Companhia Vale do Rio Doce, then a bloated state-run enterprise, embarking on a global expansion drive, which its CEO Agnelli masterminded and spearheaded since 2001.

Friends and rivals alike say a nose for great deals, vast capital markets experience, charisma and perseverance -- mixed with aggressiveness and a management style some call authoritarian -- are key attributes that Agnelli brought to Vale, helping to turn it into a global powerhouse.

The youthful-looking, 48-year-old athletic executive with curly black hair has come to symbolize the new Vale, which is embarking on a seemingly unstoppable expansion cycle and diversifying from its core business of iron ore into other metals.

With 14 acquisitions under Agnelli, including the $18 billion purchase of Canadian nickel producer Inco in 2006, Vale is now in complex negotiations to acquire Swiss-based rival Xstrata in what could become one of the world's biggest takeovers, valued at more than $90 billion.

"He did a fantastic job taking advantage of the timing and realizing that a company like Vale had to expand abroad," said Eike Batista, a billionaire Brazilian mining entrepreneur who in 2005 sold his big stake in Canada's Canico to Vale, giving it the large Onca Puma nickel deposit in Brazil.

"The timing of the Canico acquisition was excellent, Inco was even better, just a few months before prices tripled. He's the right person at the right place at the right time," said Batista, whose father was Vale's president when it was still in state hands.

SWEET RIVER

Vale, whose full name means Valley of the Sweet River, was privatized in 1997 for $3 billion.

In the last five years alone, Vale's market value soared 16 times, reaching $152 billion in 2007 and $157 billion as of mid-March.

A successful Xstrata deal would make Vale, now the world's top iron ore producer, the planet's No. 2 diversified miner after BHP-Billiton and the No. 1 nickel producer.

Some analysts say the timing of the Xstrata talks may be off as global market jitters have sheared 7 percent off the price of Vale shares since late February.

But others see Vale's huge iron ore price hike of 65 to 71 percent, hammered out with clients last month, as a more important financial element reinforcing the proposed deal.

The main sticking point in the talks is the question of marketing rights for Xstrata products that its major stockholder, Glencore, does not want to give up, Vale said.

Agnelli has drawn the line on marketing rights, saying Vale prefers to deal with its customers on its own. People who know Agnelli say that despite his audacity, he can walk away from a seemingly good deal if its conditions exceed his notion of prudence.

"If he said he will not give up certain things, he will not. It's not part of a game. He is not two-faced," said a long-time Agnelli colleague who did not want to be named, reflecting Vale's policy not to communicate outside of official channels, part of Agnelli's command style.

"He is a brilliant negotiator who knows how to achieve what he wants," the co-worker said, "but he knows where to stop."

FAIR PRICE

That was the case with aluminum producer Alcan, which Rio Tinto carried away last year for $38 billion. Agnelli said then Vale was interested but would not raise the stakes beyond what it considered a fair price.

Agnelli also is seen benefiting from his good relationship with President Luiz Inacio Lula da Silva, with whom he shares a penchant for emotional speeches on creating new jobs and making Brazil grow. Agnelli often brings young Vale workers along to media events to speak about their bright plans for the future.

"It's a strong link with Lula and it boosts Vale's image in Brazil," said a mining sector executive who did not want to be named to avoid drawing Agnelli's disfavor.

"It's not about exchanging favors," the executive said. "It's a perception that the president is on their side."

Agnelli started his career as a graduate trainee in 1981 at the country's largest private bank, Bradesco, after getting a degree in economics at the prestigious Armando Alvares Penteado Foundation in his native Sao Paulo. He hails from a lower-middle-class family of Italian origin, unrelated to the Agnellis who founded and ran Fiat.

Colleagues from his time at Bradesco recall he was regarded as a "prodigy" by bosses. The bank even had to modify its policy to make him a director in 1998 after less time than normally required for an aspiring star employee.

He was soon named chief of Bradesco's Bradespar holding company, managing its investments, among them a big stake in Vale.

Shortly afterward, Agnelli became the president of Vale's board. He proposed an expansion plan to the freshly privatized company, and was quickly picked to spearhead it as CEO.

"LEADERSHIP"

"The craziest mind would not have imagined then where Vale's value would be now, what kind of presence in the world Vale would have now. His leadership is the root of this success," said Agnelli's colleague.

Vale took Inco, its biggest acquisition so far, from under the nose of suitors Phelps Dodge and Teck Cominco by offering cash, which Agnelli quickly raised from a group of banks.

Earlier, it frustrated rival BHP's bid for No. 2 Brazilian miner Caemi when Agnelli convinced Japan's Mitsui, which had a preference purchase option, to be its partner in a bigger company including Caemi and No. 3 Brazilian miner Ferteco.

Agnelli said at a recent news conference he is sometimes criticized for treating the company as if it were his own.

"I know it's not my own, I only have some shares," Agnelli said, "but I see it as the only way to treat a company where you work, as your own."

That type of management style brings results but does not please everyone. "Authoritarian" is a common description.

"There's a lot of pressure on the senior management in Vale and many can't take Agnelli's style, which includes chiding directors in front of others," said the mining sector executive who didn't want to raise Agnelli's ire, whose company employs former Vale managers.

"Many are dissatisfied and end up looking for jobs elsewhere," said the executive.

Agnelli's colleague at Vale disagreed. "I've never seen him being rude to people. He is demanding, yes, and he makes people race against time."

Agnelli is known as a workaholic who spends 16 hours a day in the office. To learn English, which he's been studying for the past two years, he lodged a teacher at his home so that they could go over lessons over breakfast or before bed, Vale sources said.

He once told Brazil's Epoca weekly newsmagazine that if he were no longer the CEO of Vale, he would "slow down a bit" and spend more time with his wife and two teenage children, but he was not thinking of abandoning big business for the next 10 years.

His hobbies include motor boating in the resort area of Angra dos Reis near Rio, where he has a country home, and an occasional weekend game of soccer with friends.

He broke his foot playing soccer earlier this month, according to Vale sources, but traveled to Brasilia the next day for a meeting with government officials, having to check into a hospital on his return. (Editing by Brian Moss and Todd Benson)