WHEN he announced the UK’s largest ever merger in February of this year, Glencore chief executive Ivan Glasenberg did so with a massive endorsement of the industrial logic behind such a deal.
Here was one of the world’s most successful commodities trading groups getting together with a massively powerful resources group in which it already held a significant stake.
“We have a fantastic opportunity to create a new powerhouse in the global commodities industry. The merged company will be the most diverse major resource group, combining two complementary project portfolios and pipelines with the best commodities marketing business in the world,” Glasenberg told shareholders.
He continued gushing to the point where shareholders must have felt that if they voted for the £56bn they would never have a worry in the world again.
But by yesterday the rhetoric had changed significantly.
The Xstrata deal, said Glasenberg, is not a “must do” deal, as he spoke to analysts after the group’s results. If shareholders have another opinion and vote the deal down, it is their choice, he says.
What has happened since the beginning of the year is that Qatar Holdings, an investment group that counts holdings in Barclays, the London Stock Exchange and Sainsbury as part of its investment portfolio, built up a 12 per cent Stake in Glencore’s target, Xstrata.
Qatar, which is holding out for a higher offer from Glencore while threatening to vote the deal down, maintains its Xstrata shareholding is a long-term one and that it believes in the long-term future of the group regardless of whether the merger goes through.
Others think that the Qataris, who are being advised by Nicholas Shott and others at Lazard, have been wholly opportunistic.
They claim they have raised their stake to a level where, with some support, they can block the mega merger from going through while pinning their hopes on the fact that Glasenberg will eventually pay up because he wants the deal so much (just look at those quotes again from February).
Whatever the truth of each side’s intentions, neither want to blink first. Shareholders vote on the deal on 7 September.
My hunch is that Glasenberg will up his offer from 2.8 shares to every one in Xstrata to three but not go as high as the Qataris want at 3.25. That might be enough to win the day, with institutions such as Standard Life, Schroders and Fidelity, more likely to swing behind the deal.
But it will be a close call.
Glasenberg may have cause to regret talking up the deal’s merits so much when it was first announced. It will be a massive anti-climax if it doesn’t now go through.
Last week I bemoaned the way that Sir Richard Branson refused to take defeat gracefully on losing out to First Group on the West Coast rail franchise. I thought he was simply being graceless but would drop the matter after a period of moping.
But as the days go by, I can’t help feeling impressed by his dogged pursuit of a rethink of the decision.
There’s an internet-led petition which was set up by a member of the public that has already attracted around 20,000 supporters and yesterday Virgin published a list of 51 reasons why it should retain its 15-year franchise. He’s not going quietly.