Glasenberg's reputation at risk in Xstrata setback

BY REJECTING Glencore’s coveted acquisition of miner Xstrata, Qatar Holding could also put paid to the reputation of Ivan Glasenberg, chief executive of the commodities trader, as a consummate dealmaker.

Those who have worked with him on takeovers – and against him defending the companies he targeted – say Mr Glasenberg’s self-belief is second to none.

That, plus unbending determination, means he normally gets his way.

But this time he appears to have been wrong-footed, thinking the support of major Xstrata shareholder Qatar Holdings was in the bag.

“Did Glencore misread the Qataris? Absolutely,” said one banker familiar with the mining sector, but not involved in the deal. “Qatar does not like the limelight, so they must feel pretty strongly to end up going public.”

Apparently undeterred by the rejection, Mr Glasenberg showed little relish for compromise, letting it be known he would not overpay.

Glencore’s position had not changed, a person familiar with the matter said, and the company would rather walk away than offer more. Bankers said such talk was a standard MA tactic and to be expected of any company in such negotiations.

It is not only Mr Glasenberg’s track record that is under the microscope following Qatar Holdings’ surprise demand for better terms for the takeover. The bankers advising him may also have been caught napping.

The stakes are high for all involved, with banking teams working on the deal standing to lose out on a pay day worth up to $130 million if the $26 billion deal collapses.

Xstrata was due to pay up to $80 million to its financial advisers, while Glencore may have had to shell out up to $50 million.

With fee income in retreat after a 25 per cent fall in worldwide MA volumes in the first half of the year, such pay days are more important than ever for bankers struggling to bring in revenue for their increasingly cost-conscious employers.

The combination of Glencore and Xstrata would rank as the biggest ever done deal in a sector littered with the skeletons of failed deals. – (Reuters)