This article is from: http://www.reuters.com/
(Reuters) – As a tie-up between trader Glencore (GLEN.L) and miner Xstrata (XTA.L) is hammered out in coming days there is plenty of scope for hard bargaining between the two sides’ highly competitive South African bosses.
Glencore’s Ivan Glasenberg and Xstrata’s Mick Davis — both hard-driven, keen sportsmen who climbed the corporate ladder in the South African coal industry — have had a close and sometimes tense relationship for more than a decade. Glasenberg hand-picked Davis to run Xstrata 11 years ago. Xstrata floated in 2002, after buying up key Glencore coal assets, leaving the trader with a 34 percent stake.
“They clearly have a history together, as do Xstrata and Glencore, and I would expect nothing less than that they try to drive the best bargain for their shareholders,” said analyst Jeff Largey at investment bank Macquarie in London.
One key element of Glencore’s move on Xstrata — which is being billed as a “merger of equals” — is who gets to run the enlarged trader and miner.
The new company will get the bulk of its revenue from mining, leaving Davis as the obvious choice for the top job, while others point out that Glasenberg, who has said he does not plan to sell shares, is unlikely to step aside.
This has left some skeptical about whether the two brash characters would be able to work together in a combined company.
“I don’t think both will stay in a fully merged entity. Both have made so much money and I would not be surprised if one of them goes,” said a senior investment banker familiar with the mining sector. “Mick is more likely to be the one that moves.”
Glasenberg is a billionaire, owning 15.8 percent of his company, while Davis regularly heads UK executive pay lists with his multi-million dollar earnings.
“It’s hard to say how it would actually shake out, but both of those gentlemen bring certain skillsets to the table,” Macquarie’s Largey said. “If I was a shareholder in a combined entity I would like to think that they’re both involved for at least a certain period of time.”
Xstrata Chairman John Bond is expected to play a key role in negotiations and could be brought to chair the new group. Glencore’s chairman, Simon Murray, has had a troubled nine months and would not be expected to remain, some analysts say.
MUCH IN COMMON
Glasenberg and Davis have much in common.
Both are in their mid-50s, come from mineral-rich South Africa and have powerful personalities.
And both are driven by deals.
Davis, however, is nicknamed “Big Mick” for his beefy frame and six-feet two-inch height. Glasenberg by contrast is medium height and wiry.
The fact that Davis was hired by Glasenberg has coloured their relationship, said one source who knows the Glencore CEO.
“There’s a sense at Glencore that Mick wouldn’t be where is today without Ivan, who chose him … He owes it all to Ivan,” the source said. “At the same time, lots of people at Xstrata felt they were bullied by Glencore.”
For the rest of this aricle, please go to the Reuters website: http://www.reuters.com/article/2012/02/02/us-glencore-xstrata-ceos-idUSTRE8111NU20120202