Glencore soars by 20% in London

Glencore surged in London, following gains in Hong Kong trading as concerns around the company's stability eased after reports that it's talking to potential buyers for its agriculture business.

The shares rose as much as 20 per cent in London, reaching 114.45 pence a share. In Hong Kong, the stock soared a record 72 per cent.

The company, in the middle of a restructuring to withstand lower commodity prices and bolster its finances, said in a statement that it wasn’t aware of any reasons for the move. Bloomberg News reported on Friday that Singapore’s sovereign wealth fund, Japan’s Mitsui and Co. and at least one Canadian pension fund have expressed interest in buying a minority stake in Glencore’s agriculture business. That business may be worth as much as $10 billion, Sanford C. Bernstein and Co. said in a report on Monday.

“The belief that Glencore is having a ‘Lehman moment’ seems unfounded,” Paul Gait, an analyst at Bernstein, said in a note to investors. “While the leverage is clearly of concern it is not anywhere near an immediate existential threat to the company it is an issue that needs to be managed, and that is exactly what the company is doing.”

Share price

The shares were up 10 per cent at 104.80 pence by 8:37 a.m. in London, the biggest gain in the Stoxx Europe 600 Index. The stock dropped a record 29 per cent on Sept. 28, before clawing back most of the decline by the end of the week as Glencore worked to soothe investor concerns about the company’s solvency. The Telegraph newspaper also reported, without identifying its sources, that Glencore would listen to offers for the whole company, although its management doesn’t believe there are buyers willing to pay a fair value in the current market. Chief executive officer Ivan Glasenberg is trying to arrest the slump that’s wiped about $42 billion from the company’s market value this year. It has stopped paying a dividend, sold $2.5 billion in new shares and is in the process of selling assets, such as future gold and silver production, according to people familiar with the matter.

At its height in 2014, Glencore was worth more than $85 billion after its $29 billion all-share takeover of Xstrata Plc, then the world’s biggest coal exporter. Now, the market value has shrunk to about $20 billion as investors fled the business, which carries more debt than its rivals to fund its trading operations.

Bloomberg