Qatar’s Rejection Leaves Glasenberg to Decide on Xstrata – by Jesse Riseborough, Firat Kayakiran and Matthew Campbell (Blomberg Markets Magazine – Aug 31, 2012)

Ivan Glasenberg, Glencore International Plc (GLEN)’s billionaire chief executive officer, has a week to decide on his biggest bet yet — whether to raise his $31 billion offer for Xstrata Plc (XTA) or see his five-year effort to create the fourth-biggest mining company disintegrate.

Qatar’s sovereign wealth fund, which has 12 percent of Xstrata, ruled out accepting Glasenberg’s current bid yesterday. That means Glencore’s takeover probably will fail unless Glasenberg raises the offer in time for a shareholder vote scheduled for Sept. 7.

Glasenberg, a former accountant and coal trader who owns 16 percent of Baar, Switzerland-based Glencore, has worked there since 1984 and became CEO in 2002. He will make the final decision and will rely less on advisers as the deal nears conclusion, a person familiar with the matter said, declining to be identified because he wasn’t authorized to speak about it.

“He’s a preeminent trader, and don’t traders always leave it until the last minute?” Peter Davey, head of metals and mining research at Standard Bank (SBK) Group Ltd. in London, said by phone. “He’s never going to disclose his hand upfront. That’s how he makes money. It leaves the door open for him to try a better offer.”

Glencore has bid 2.8 of its shares for each one in Xstrata, below the 3.25-share level Qatar Holding LLC said it wanted to back the offer. Just 16.48 percent of shareholders can block the deal because under U.K. takeover rules Glencore is prevented from voting its 34 percent stake.

Knight Vinke

Other Xstrata shareholders including Knight Vinke Asset Management LLC and Standard Life Plc (SL/) have also called for a sweetened offer. Glencore may have to raise its bid to 3 shares to strike a deal, Jefferies Group Inc. (JEF) said Aug. 21.

Knight Vinke intends to vote against the offer “unless the terms are materially improved,” it said today in an e-mailed statement.

“If the board of Glencore is unwilling to pay for acquiring the control it seeks, we would support Xstrata’s continuing independence as a fundamentally strong and successful business,” Knight Vinke said. “Should the transaction fail to be approved, we intend to consult with other shareholders regarding the composition of the Xstrata board so as to make it more independent and robust.”

Glasenberg, 55, has repeatedly rejected the calls to raise the February offer, which has the backing of Xstrata’s board. He last week said in an interview that a negative vote from Qatar Holding would sink the current bid.

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