Yesterday Glencore again publicly resisted demands by SWF Qatar Holdings to increase its offer for Xstrata. Qatar Holdings has increased its holdings in recent months so that it may be able to block the deal. The price of Xstrata dropped 1% yesterday after Glencore’s chief, Ivan Glasenberg, expressed his willingness to walk away from the deal. Shareholders vote on September 7. The merger would require approval of 75% of the shareholders, excluding Glencore. If the deal fails to go through, Glencore must pay a $468 million fee to Xstrata.
I suspect that Qatar Holdings will blink–there is obviously a lot of uncertainty about how hard China’s landing will be, and Glencore’s offer of 2.8 shares for each Xstrata share seems increasingly generous. Qatar Holdings has stood firm on its demand for 3.25 shares. What does Qatar know about Xstrata, Glencore, and/or market conditions that no one else seems to know?