Glencore Blamed for Deal Disruption

Sellside analysts and buysiders blame Swiss-based commodity powerhouse Glencore for breaking off the engagement of Vale and Xstrata. “Glencore has dictated the negotiations throughout the whole process, but it feels like they may be overplaying their hand now,” an angry Xstrata shareholder tells LatinFinance. “Incredibly, 65% of the holders are not being represented here – it’s a disenfranchisement of the majority,” he adds, noting both Vale and Xstrata point to possibility of value creation in a merger. “Marketing rights for nickel and the trading commissions that Glencore was asking for were the main reasons the deal didn’t happen,” says a mining analyst at a Sao Paulo bank. The analyst adds that Vale shares should recover following the announcement and that the company may seek other acquisitions, including Southern Copper and Antofagasta if the Xstrata bid truly fails.