Top shareholders gunning for Xstrata's Big Mick, could block deal without premium
The Telegraph reports Chairman John Bond and CEO Mick Davis risk being voted off the board of Xstrata after being accused of negotiating "a cosy stitch-up" with Glencore without consulting them about negotiating a premium offer rather than a merger of equals.
The Telegraph also revealed that Davis could collect in the region of £11 million ($17 million) thanks to change of control clauses in his contract:
"Richard Buxton, head of UK equities at Schroders, said he would remind Sir John of his duty to all shareholders: “This is the biggest test of independent directorship that London has ever seen.
He said he would “happily vote Mick out” adding: “We won’t be stitched up with some cosy deal that leaves shareholders out of pocket.”
Another top five shareholder, who asked not to be named, added: “Xstrata should be under no delusions – it can run without Mick Davis at the helm. No one is that crucial to a company.”
The Times reports of a possible blocking of the deal by Xstrata shareholders if the Swiss commodities trader does not offer a “substantial” premium to take control. Via Bloomberg:
Xstrata’s growth prospects in the next 10 years are higher than Glencore’s, the newspaper said, citing Richard Buxton, head of U.K. equities at Schroders Plc. (SDR)
Others have a very different view of 'Big Mick' Davis.
Bloomberg reports Xstrata, today the world’s biggest exporter of thermal coal and the fourth-largest copper producer, under Davis has gone from having a fewer than 2,500 employees to a workforce exceeding 70,000 in 20 countries.
“The legacy is building one of the premier, largest metals and mining companies in the world, and having done so in a versatile manner,” said Jeff Largey, a mining analyst at Macquarie Group Ltd. in London.
Even before building up Xstrata through a series of billion dollar transactions, Davis was a formidable dealmaker who with fellow South African Brian Gilbertson created Billiton. Davis left for Xstrata after Billiton was sold to BHP in 2001:
“He’s very associated with it,” said Michael Rawlinson, a former JPMorgan Chase & Co. investment banker who is now a mining analyst at Liberum Capital Ltd. in London. When shareholders back Xstrata, “they are kind of backing Mick too, to the extent that an Xstrata without Mick is less valid.”
Glencore’s Ivan Glasenberg and Davis both cut their teeth in South Africa’s coal industry in the 1980s and are keen sportsmen (Davis is a cricket fanatic), known for 70-hour workweeks and are ferocious dealmakers. Their close relationship have been tense in the past.
The Australian does not mince its words about the highly competitive Glasenberg:
Mining industry legend has it that when Glencore's Ivan Glasenberg does a deal with you, you can be certain about two things: he will stick to it and it will be a bad deal for you.
His legendary deal-making skill explain why he is worth some $5 billion and his old schooldays chum, Xstrata's Mick Davis, is leery about accepting his proposed takeover.