LONDON--Activist fund Knight Vinke Sunday rejected commodities
titan Glencore International PLC's (GLEN.LN, GLNCY) latest offer
for Anglo-Swiss miner Xstrata PLC (XTA.LN) and called upon
Xstrata's independent board of directors to seek the highest offer
possible by inviting third-party offers.
"Glencore's latest proposal now makes clear that the transaction
represents a change of control--for which, as we have continued to
stress, an appropriate premium needs to be paid," said David
Trenchard, vice-chairman of Knight Vinke, a top-30 shareholder in
Xstrata.
Glencore on Friday raised its offer to 3.05 Glencore shares for
every Xstrata share in a last-ditch effort to salvage the deal from
the brink of collapse. Glencore had originally offered a share-swap
ratio of 2.8 in February which garnered opposition from some of
Xstrata's largest shareholders including Xstrata's second-largest
shareholder Qatar Holding LLC, which said it would vote against the
original deal.
Standard Life Investments (SLI.LN), which initially opposed the
deal, said on Friday that it supported the new proposal while Qatar
Holding, which could have blocked the deal on its own depending on
the level of absenteeism at Friday's shareholder meeting, remained
silent on the matter. Glencore made its latest offer public just
before Xstrata's shareholders were due to vote on the merger of
equals to create a mining juggernaut with a market capitalization
of more than $70 billion.
Mr. Trenchard said that "the value of Xstrata is substantially
more than Glencore is proposing today" given analysts' expectations
that Xstrata's earnings will rise more than threefold over the next
two years due to its organic growth pipeline.
He said that Xstrata's independent board of directors, which
should not include any representatives of Glencore, should now
review all options including the possibility of seeking third-party
bids.
Analysts have said in the past that it would be hard to attract
a third-party bid to the table given that Glencore owns a 34% stake
in Xstrata and has shown in the past that it can use its stake to
oppose Xstrata management's ability to negotiate deals. Glencore
played a role in the failed talks between Brazilian iron-ore miner
Vale SA (VALE) and Xstrata in 2008 when the two were contemplating
a tie-up.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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