Top Xstrata shareholder BlackRock backs merger with Glencore

The highly criticised £50bn merger between commodity giant Glencore and miner Xstrata has been given timely boost with the support of BlackRock, the world’s largest fund manager.

0

0

0

0

Email

BlackRock owns a 6pc stake in Xstrata through a mixture of traditional funds and index-linked funds Photo: Reuters

By Helia Ebrahimi, and Emma Rowley

9:02PM BST 28 Mar 2012

The US investor broke its silence and said it will support the controversial deal despite months of complaints from other investors. Xstrata’s shareholders have complained they are being short-changed by the terms Glencore has proposed.

Standard Life, Schroders and Allianz Global Investors have all publicly come out in opposition, with a clutch of other shareholders also vowing to vote down the “Glenstrata” mega-merger.

But BlackRock, which is Xstrata’s second biggest shareholder, has now publicly said the structure of the deal is better for both companies.

BlackRock owns a 6pc stake in Xstrata through a mixture of traditional funds and index-linked funds.

Catherine Raw, who co-manages BlackRock’s $14bn (£9bn) World Mining Fund, said she supports the bid to join the two FTSE 100 companies in what is billed an all-share “merger of equals”.

Under the terms of the deal, Glencore is offering 2.8 of its own shares for every Xstrata share, which Xstrata investors say is too low, given Glencore’s shareholders will get the larger share of the combined group.

Ms Raw was not in that camp. “If you were to ask me today whether or not the natural resources team would accept the offer, then yes, we would,” she told Bloomberg. “In terms of the natural resource team’s view, we see the joint entity as being a better solution for both companies.”

However, many investors say their objections are not about the rationale behind a merger - but rather the structure of the deal.

Neil Dwane, chief investment officer of RCM, the equities unit of Allianz Global Investors, said last month: “We feel the deal not only undervalues Xstrata [but] we are being offered unattractive [Glencore] paper.”

Questions have also been asked about the deep-rooted economic interests BlackRock has in Glencore.

When Glencore floated last May, BlackRock was one of a small group of cornerstone investors that made the IPO possible, committing $360m at the time of flotation. But BlackRock’s relationship stretches back to when plans for a merger with Xstrata began to be formulated by Glencore chief executive, Ivan Glasenberg. In 2009 Blackrock helped inject $2.2bn into Glencore, which at the time was facing mounting pressure on its liquidity. The fund manager still collects 5pc a year in interest payments on its allocation of bonds, which are due to be paid at the end of 2014.

Other Xstrata investors have privately said this has influenced their assessment of the deal. But Ms Raw stressed there were “differing views across the firm as to whether or not the deal is a good one” with more than one fund manager holding shares.

======================================================

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/even-the-stars-of-mining-deals-are-sidelined-in-sinking-market/article26434747/

Even the stars of mining deals are sidelined in sinking market

Eric Reguly

ROME — The Globe and Mail

Published Friday, Sep. 18, 2015 4:50PM EDT

You know that something is seriously awry in the global mining industry when the two smartest men in the room – Ivan Glasenberg and Mick Davis – are crouching under rocks. Mr. Glasenberg, CEO and co-founder of Glencore , the world’s top commodities trader, is busy whittling down a mountain of debt in the wake of the company’s submarine performance on the London Stock Exchange. Mr. Davis, the former CEO of Xstrata , launched X2 Resources a couple of years ago but has yet to do a deal.

Backed by Glencore, which bought into Xstrata’s rights offerings, Xstrata went from a nonentity to one of the world’s top mining groups in the last decade. Among its conquests was Canada’s Falconbridge, bought in 2006 for a seemingly outrageous price, only to pay for itself in about two years. Glencore, meanwhile, refined the art of commodities trading by plucking profits from the entire value chain – from mine to railway to port to ship to warehouse to end-user. Superb market intelligence and steely trading nerves helped.

=======================================================

Time for Mick to come home?