mining company

DealBook: Glencore’s Takeover of Xstrata Gains Chinese Approval

April 16, 2013 by NewsMaker Leave a Comment

Fabrice Coffrini/Agence France-Presse — Getty ImagesMick Davis, chief of Xstrata, was expected to head the merged company for six months but will now step down as soon as the takeover is finished.

LONDON – The commodities trader Glencore International received final regulatory approval from China on Tuesday, clearing the way for its proposed $30 billion takeover of the mining company Xstrata.

To ease Chinese antitrust concerns, Glencore said it would sell a Peruvian copper mine currently owned by Xstrata.

The combined mining and commodities trading company would be one of the world’s largest producers of copper, and the Chinese authorities had been worried that its local companies might face higher prices for a variety of metals.

The Ministry of Commerce, which dragged its feet for more than a year after Xstrata’s shareholders initially balked at the price of the proposed all-share offer from Glencore, is the final regulator to back the deal.

European antitrust authorities approved the takeover in November after Glencore agreed to sell assets and reduce its operations on the Continent, while South African regulators signed off on the deal this year.

Shares of Glencore rose 3.5 percent in afternoon trading in London, while Xstrata’s shares rose 4.5 percent.

Glencore said Mick Davis, the chief executive of Xstrata who was expected to head the merged company for six months, would now step down as soon as the takeover was completed.

Mr. Davis had been at the center of tense negotiations last year as the sovereign wealth fund Qatar Holding, a large Xstrata shareholder, pressed Glencore to improve its original offer.

Glencore eventually relented, raising its offer to 3.05 of its shares for each Xstrata share from its initial 2.8-share proposal.

In return, however, Glencore had demanded that its chief executive, Ivan Glasenberg, take over from Mr. Davis of Xstrata earlier than previously announced.

The original takeover offer had called for three Xstrata executives – Mr. Davis; John Bond, the chairman; and Trevor Reid, the chief financial officer – to hold the same positions at the merged company.

The agreement with China’s antitrust authorities requires Glencore to sell Xstrata’s Las Bambas copper mine in Peru. Glencore said it would inform the regulators about the sale no later than the end of July, with a potential sale to be completed by next summer.

Glencore also agreed to supply Chinese companies with a minimum amount of copper, zinc and lead concentrate through the end of the decade to ease concerns that China might face shortages metals needed for its local economy.

The deal is expected to be completed next month.

Article source: http://dealbook.nytimes.com/2013/04/16/glencores-30-billion-takeover-of-xstrata-gains-chinese-approval/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: copper mine, glencore international, mining company

DealBook: Rothschild Loses Fight for Control of Indonesian Mining Giant

February 21, 2013 by NewsMaker Leave a Comment

Will Oliver/Agence France-Presse — Getty ImagesNathaniel Rothschild is heir to one of Europe’s banking families.

LONDON — The battle for control over the mining company Bumi reached a climax on Thursday as shareholders voted against a major board change proposed by the British financier Nathaniel Rothschild.

The decision signifies the end of a feud that lasted months between Mr. Rothschild, heir to one of Europe’s banking families, and the Indonesian Bakrie family dynasty for control of coal mining assets across the Southeast Asian country.

In an acrimonious battle that had become increasingly personal, Mr. Rothschild, 41, had proposed replacing 12 of Bumi’s 14 board members, including its chief executive and chairman.

The British financier planned to name his own management team, including himself, in an effort to return to Bumi’s board, from which he resigned last year.

After a two-hour shareholder meeting on Thursday, held on the grounds of the military barracks of Britain’s oldest regiment in central London, Bumi’s investors, which included major institutional shareholders as well as retail investors, rejected a majority of Mr. Rothschild’s proposed board changes.

“Is there a future for this company?” Robin Renwick, Bumi’s nonexecutive director, asked the gathered shareholders. “We have all heard a lot of doom and gloom. Absolutely, there is a future.”

The failure to replace Bumi’s board is a major setback for Mr. Rothschild, the former co-chairman of the hedge fund Atticus Capital, who co-founded Bumi in 2010 through a $3 billion deal with the Bakrie family that created the mining giant, which is listed in London.

Since the original deal was announced, little has gone right for the company. The global economic slowdown has slashed demand for coal, particularly in fast-growing emerging economies, and Bumi’s boardroom infighting has been mirrored by a 60 percent fall in the company’s share price over the last three years.

Will Oliver/Agence France-Presse — Getty ImagesSamin Tan is to step down as chairman of Bumi.

Last year, the mining company announced an investigation into allegations of financial misconduct involving around $500 million at Bumi’s Indonesian subsidiaries. The move was quickly followed by an offer by the Bakries to acquire all of the company’s mining assets for roughly $1.2 billion.

As part of the continuing board intrigue, the Indonesia family sold a stake in Bumi late last year to Samin Tan, a fellow Indonesian mining mogul, for $1 billion. The deal helped the Bakries to repay loans owed to a consortium of banks led by Credit Suisse.

During the shareholder meeting on Thursday, Mr. Rothschild repeatedly called on Mr. Tan, who will step down as Bumi’s chairman, to answer shareholders’ questions. Despite the demands, most of the talking was left to the company’s other board members.

Talking to reporters at the sidelines of the meeting, the British financier, who was accompanied to the event by his mother, said his motivation was not directed specifically at his former Indonesian partners, but was aimed at improving the company’s stock price.

“It’s not personal,” Mr. Rothschild said before the results of the shareholder vote were announced. “The board has an enormous amount to do to win back the support of minority shareholders.”

With the British financier’s proposal rejected, Bumi said it would now focus on divesting itself of coal assets to the Bakrie Group, the family’s conglomerate, as well as on developing its remaining mining resources.

Adek Berry/Agence France-Presse — Getty ImagesAburizal Bakrie heads the Indonesian family behind Bumi.

The result is a personal loss for Mr. Rothschild, whose hopes of securing victory were dealt a blow this week when a major Indonesian investor connected to the Bakries sold shares worth 10 percent of Bumi’s total stock to the Indonesian media mogul Hary Tanoesoedibjo and two hedge funds.

The share sale followed a ruling by British authorities that capped the voting rights of some of Bumi’s majority Indonesian shareholders. Analysts say that by selling shares to the new investors, who were expected to vote against Mr. Rothschild’s proposals, the Bakrie family increased its chances of successfully opposing the boardroom changes.

Mr. Rothschild said on Thursday that he would retain his minority stake in Bumi.

The battle for control of Bumi could have wider implications. Aburizal Bakrie, who heads the Indonesian family, is a candidate in the country’s presidential elections next year. A potential rival for the office is Prabowo Subianto, the brother of Indonesian billionaire Hashim Djojohadikusumo, who backed Mr. Rothschild’s proposed board changes and would have joined Bumi’s board if the British financier had won shareholder backing.

Article source: http://dealbook.nytimes.com/2013/02/21/rothschild-loses-his-battle-for-control-of-mining-company-bumi/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: emerging economies, mining company, robin renwick

DealBook: Rothschild Loses Battle for Control of Mining Company Bumi

February 21, 2013 by NewsMaker Leave a Comment

Will Oliver/Agence France-Presse — Getty ImagesNathaniel Rothschild is heir to one of Europe’s banking families.

LONDON – The battle for control over the mining company Bumi reached a climax on Thursday as shareholders voted against a major board change proposed by the British financier Nathaniel Rothschild.

In an acrimonious battle that had become increasingly personal, Mr. Rothschild, 41, had proposed replacing 12 of Bumi’s 14 board members, including its chief executive and chairman.

The British financier planned to name his own management team, including his own attempted return to Bumi’s board, from which he resigned last year.

After a two-hour shareholder meeting on Thursday, held on the grounds of military barracks of Britain’s oldest regiment in central London, Bumi’s investors, which included major institutional shareholders as well as retail investors, rejected the majority of Mr. Rothschild’s proposed board changes.

“Is there a future for this company?” Robin Renwick, Bumi’s non-executive director, asked the gathered shareholders. “We have all heard a lot of doom and gloom. Absolutely there is a future.”

Since the original deal was first announced, little has gone right for the ill-fated company. The global economic slowdown has slashed demand for coal, particularly in fast-growing emerging economies, and Bumi’s boardroom infighting has been mirrored by a 60 percent fall in the company’s share price over the last three years.

Will Oliver/Agence France-Presse — Getty ImagesSamin Tan is to step down as chairman of Bumi.

Last year, the mining company announced an investigation into alleged financial misconduct involving around $500 million at Bumi’s Indonesian subsidiaries. The move was quickly followed by an offer by the Bakries to acquire all of the company’s mining assets for roughly $1.2 billion.

During the shareholder meeting on Thursday, Mr. Rothschild repeatedly called on Mr. Tan, who will step down as Bumi’s chairman, to answer shareholders’ questions. Despite the demands, the majority of the talking was left to the company’s other board members.

With the British financier’s proposed rejected, Bumi said it would now focus on divesting its coal assets to the Bakrie Group, as well as on developing its remaining mining resources.

Adek Berry/Agence France-Presse — Getty ImagesAburizal Bakrie heads the Indonesian family behind Bumi.

The British financier said on Thursday that he would retain his minority stake in Bumi.

The battle for control of Bumi could have wider implications. Aburizal Bakrie, who heads the Indonesian family, is a candidate in the country’s presidential elections next year. A potential rival for Indonesia’s highest office is Prabowo Subianto, the brother of Indonesian billionaire Hashim Djojohadikusumo, who backed Mr. Rothschild’s proposed board changes and who would have joined Bumi’s board if the British financier had won shareholder backing.

Article source: http://dealbook.nytimes.com/2013/02/21/rothschild-loses-his-battle-for-control-of-mining-company-bumi/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: board changes, doom and gloom, mining company

DealBook: Glencore Wins European Approval for Xstrata Deal

November 22, 2012 by NewsMaker Leave a Comment

Carlos Barria/ReutersCopper cathodes at the Yangshan Deep Water port near Shanghai. Xstrata is one of the world’s biggest miners of copper.

LONDON — Glencore International gained European regulatory approval on Thursday for its $32 billion takeover of the mining company Xstrata, after agreeing to sell assets and reduce its operations in Europe to satisfy antitrust concerns.

On Tuesday, Xstrata’s shareholders voted to back the multibillion-dollar takeover, which will create a mining giant with a market capitalization of around $80 billion.

The shareholders, however, rejected plans to give around 70 of Xstrata’s top executives bonuses worth a combined $220 million. The failure to secure the payouts, which had been supported by Xstrata’s board, led the company’s chairman, John Bond, to say he would resign upon completion of the deal.

Antitrust authorities had raised concerns that the takeover would reduce competition in a number of commodity sectors.

On Thursday, the European Union ordered Glencore to sell its 8 percent stake in Nyrstar, the world’s largest zinc producer. In an effort to increase competition in the European zinc market, Glencore also must end an agreement with Nyrstar to sell the company’s zinc.

By ending its sales agreement with Nyrstar, Glencore will cut its share of the European zinc market from 50 percent to about 40 percent. Without the concessions, the European Union said, the combined Glencore-Xstrata would have had an incentive to raise zinc prices across the Continent.

“The proposed remedy ensures that competition in the European zinc metal market is preserved,” the European competition commissioner, Joaquín Almunia, said in a statement on Thursday.

Glencore said on Thursday that it had noted the European Union’s approval of the proposed Xstrata deal.

Shares in Glencore rose 3 percent in afternoon trading in London on Thursday, while shares in Xstrata increased 3.1 percent.

The takeover, which has taken more than nine months of sometimes tortured negotiations, is now expected to close early next year, according to people with direct knowledge of the matter, who spoke on the condition of anonymity because they were not authorized to speak publicly.

South African and Chinese antitrust authorities still must approve the deal.

The combination, which initially was opposed by several of Xstrata’s leading investors, including the sovereign wealth fund Qatar Holding, comes at a difficult time for the mining industry. A slowdown in fast-growing emerging economies like China and India has hit commodity prices.

The Glencore-Xstrata deal may also lead to a new round of consolidation in the sector, as companies adjust to the economic reality of lower prices and a decline in demand.

Article source: http://dealbook.nytimes.com/2012/11/22/glencore-wins-antitrust-approval-for-xstrata-deal/?partner=rss&emc=rss

Filed Under: Business News Tagged With: cathodes, mining company, regulatory approval

DealBook: Glencore Increases Offer in Bid to Secure Deal

September 7, 2012 by NewsMaker Leave a Comment

9:28 a.m. | Updated

LONDON — Glencore International, the world’s biggest commodities-trading company, has potentially saved its mega-merger with the mining company Xstrata by sweetening the terms of the all-share deal at the last minute as it seeks to gain shareholder support.

The commodities trader is trying to win over investors, including Qatar Holding, Xstrata’s second-largest shareholder, which had threatened to block the deal.

Under the terms of the revised deal, Glencore has proposed to increase its offer to 3.05 shares for every Xstrata share. The commodities trader had initially offered 2.8 of its own shares for every Xstrata share.

For months, Qatar Holding had held out for a ratio closer to 3.25. Qatar, which owns 12 percent of Xstrata shares, was poised to vote against the deal at a shareholder vote on Friday.

Within minutes of the vote, Glencore increased its offer with the condition that Ivan Glasenberg, the chief executive of Glencore, be made the chief executive of the merged company.

Under terms the companies agreed in February, Mick Davis, Xstrata’s chief executive, was to lead the new company, even though Xstrata’s shareholders would own less than 50 percent of the combined Glencore-Xstrata.

Xstrata confirmed that it had received the new proposal. The new offer also allows the companies to change the structure of the deal from a merger that required 75 percent shareholder approval to a takeover. That would then mean Glencore, with its 34 percent stake in Xstrata, would only need 16 percent or more of Xstrata shareholders to approve the new offer.

“This is now a lot cleaner deal,” said Michael Rawlinson, head of natural resources at Liberum Capital in London. “It’s more of a takeover with Ivan as C.E.O.”

Glencore shares fell 4 percent in midday trading in London, while stock in Xstrata rose 7.7 percent on Friday, as analysts now expected the merger to take place.

The increased offer is a major change for Mr. Glasenberg, who said last month that it was “no big deal” if Qatar’s opposition quashed the Glencore-Xstrata merger. He had held firm in public that no change of terms would be forthcoming and suggested to Glencore shareholders and financial advisers that Glencore could make a new offer for Xstrata next year.

Glencore’s initial public offering last year, which was the biggest stock market listing by value in the history of the London Stock Exchange, paved the way for an Xstrata merger.

Qatar’s opposition to Glencore’s initial deal had galvanized other Xstrata shareholders, who also were disgruntled about the deal terms.

Together, they had been on the verge of blocking a merger that would combine Glencore, the world’s biggest trader of commodities like wheat and aluminum, with Xstrata, one of the world’s biggest miners of copper and coal.

“We are supportive of the improved terms and the changes to the executive governance arrangements,” said David Cummings, head of equities at Standard Life Investments, a fund manager that owns 1.4 percent of Xstrata and 0.8 percent of Glencore. “The deal will, we believe, enhance the growth prospects of the combined group.”

Previously, Mr. Cummings had publicly criticized the deal, calling the earlier offer “inadequate.”

Simon Murray, Glencore’s chairman, adjourned the Glencore shareholder meeting shortly before it was due to begin on Friday morning in Zug, Switzerland.

Developments have “happened very recently overnight,” Mr. Murray told shareholders and journalists who had gathered for the vote.

An Xstrata representative did not specify the date of a new shareholder vote on the deal. The new terms were a proposal in outline form, not a firm offer, Xstrata added. The company first planned to vote on the transaction in May but was forced to push the vote to September because of Qatar’s opposition.

The new delay means that the deal will now take at least eight months to complete from the date it was unveiled in February. During this time, metal prices have fallen sharply, hurting Xstrata’s earnings, which fell 33 percent in the first six months of the year. Xstrata’s declining fortunes this year had led most London analysts and investors to not expect an improved offer.

The companies have considered a merger several times over the last five years, most recently in the months leading up to the flotation, according to a person with direct knowledge of the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

In a presentation to shareholders, Xstrata had discussed the benefits of a deal. The last attempt was several months before Glencore’s May 2011 flotation, according to a banker who was present during the negotiations.

A banker to one of the two companies, who spoke on the condition of anonymity because he was not authorized to speak publicly, confirmed that Mr Glasenberg made the new offer to Qatar at around 9 p.m. London time on Thursday.

“This is all about face-saving,” the banker said. The higher offer “was always there as a possibility,” he added. But Qatar and Glencore’s hardening public opposition had blocked all lines of communication and potential compromise.

While Qatar has won improved terms, it may have to compromise on the issue of executive management. Qatar spent $5 billion buying Xstrata shares in part because of its confidence in Mr. Davis and his team, and the sovereign wealth fund supported Mr. Davis as the head of Glencore-Xstrata.

Article source: http://dealbook.nytimes.com/2012/09/07/glencore-postpones-meeting-in-bid-to-secure-deal/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: ivan, mining company, shareholders

DealBook: Rio Tinto and Mitsubishi Raise Bid for Coal & Allied

August 27, 2011 by NewsMaker Leave a Comment

Rio Tinto and the Mitsubishi Corporation upped their offer to acquire all of Coal Allied to roughly $131 a share, from $128, in a deal that values Coal Allied, an Australian mining company, at around $11.6 billion.

The improved price, which comes a few weeks after the first proposal, represents a 39 percent premium to Coal Allied’s closing price before the suitors initially approached the company about an acquisition. The directors of Coal Allied have recommended the deal.

Rio Tinto and Mitsubishi own 75.7 percent and 10.2 percent of Coal Allied, respectively. After the deal closes, they would own 80 percent and 20 percent, respectively.

The Coal Allied deal is the latest in a flurry of activity around Australian miners.

Earlier this week, Glencore, the commodities giant, moved to acquire the remaining shares of Minara Resources, a nickel producer. Peabody Energy and ArcelorMittal made a hostile bid for Macarthur Coal.

Article source: http://dealbook.nytimes.com/2011/08/26/rio-tinto-and-mitsubishi-raise-bid-for-coal-allied/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: acquisition, mining company, mitsubishi corporation