Glencore International Plc met with Qatar’s sovereign wealth fund in London today to try to revive a 16 billion-pound ($25 billion) takeover of Xstrata Plc, three people with knowledge of the situation said.
Qatar Holding LLC late yesterday surprised global markets by objecting to the proposed deal, which would create the fourth-biggest mining company, because the price was too low. The fund has spent more than $4 billion amassing an 11 percent Xstrata stake this year. Its stance adds to investor opposition to the transaction and raises concern the deal will fail.
Glencore, headed by CEO Ivan Glasenberg, seen here, today said it’s considering a proposal put to its board from Xstrata about changes to the payments. Photographer: Andrey Rudakov/Bloomberg
“This is a seismic development that has almost certainly caught Glencore off guard,” Liberum Capital Ltd. analysts wrote in a note today, referring to Qatar’s stand. “We firmly expect Glencore (GLEN)’s response will be that the economics don’t support a merger at 3.25 and that it is opposed to sweetening its offer.”
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