GLENCORE has trimmed its plans for an increased stake in zinc producer Kazzinc, as it said yesterday it would acquire an extra 18.91 per cent of the firm from Verny Capital.
The commodities giant, which already owns 50.7 per cent of Kazakhstan-focused Kazzinc, was originally targeting an acquisition of up to 48.73 per cent from the private equity firm.
Glencore, which is in the throes of final merger talks with miner Xstrata, said yesterday it would only increase its holding in the zinc producer to 69.61 per cent, in return for up to $1.4bn (£863m) of both shares and cash. The deal will include at least 176m Glencore shares to be issued to Verny.
At its initial public offering in May last year, Glencore said it would increase its majority holding in Kazzinc to 93 per cent. The plan was to float Kazzinc’s gold business separately, but a source close to the deal said a listing was unlikely in the current environment.
Richard Knights at Liberum Capital suggested yesterday that the new deal was a “cash light” way of “creeping up its ownership in Kazzinc, using only $400m in cash, compared to the $2.2bn in cash pledged at IPO”.