Glencore merger with Xstrata not a 'must-do' deal, says Glasenberg

The chief executive of commodities trading giant Glencore prepared the City
for the failure of the deal of the year as he said his company's planned
merger with FTSE 100 miner Xstrata is not a "must-do deal".

Ivan Glasenberg, Glencore's chief executive, said that he would not upset shareholders by overpaying for Xstrata, adding that it was not a "must-do deal".

In Glencore's clearest indication yet that it will not yield to key shareholder Qatar's demands for an improved offer, Ivan Glasenberg said he was "very relaxed" about whether the merger takes place this year as planned.

With shareholders due to vote on the planned merger on September 7, management at Glencore said that Friday is the deadline by which the commodities trader would need to raise its offer for Xstrata.

However Mr Glasenberg indicated he saw no reason to up his offer from the 2.8 Glencore shares for each Xstrata share, which is currently on the table.

"Xstrata likes this deal, Mick Davis (its chief executive) is an astute CEO, he's done a good job of running this company," he said. "If the Qataris know something more than Mick Davis and his team, I don't know what it is."

He would not comment on when he had last spoken to the Qataris, who now hold close to 12pc of Xstrata through the sovereign wealth vehicle Qatar Holding.

Glencore said that the ongoing European debt crisis and political change in the US and China had meant that the financial optimism seen in the first half of the year had "generally faded".

"Looking forward, we neither anticipate nor assume any material improvement in overall market or economic conditions in the near term," said Mr Glasenberg.

Glencore

Commodity prices compared with the previous six months fell across the board, Glencore said, with iron ore down by 11pc and nickel down 9pc. Sugar prices fell 15pc.

Despite the fall in profits, Glencore increased its interim dividend by 8pc to 5.4cents per share.

A vote on the proposed "Glenstrata" merger was pushed back to September 7 after the Middle Eastern state investment fund voiced its concern.

Glencore owns 34pc of Xstrata, but will be unable to vote on the merger, which requires a 75pc majority of all those entitled to vote. This means just 16.5pc of the total Xstrata shareholder base voting against a deal could scupper the merger.