By Claire Valdini
NBIM joins forces with Qatar Holding in attempt to eke more cash out of merger
Norway’s Norges Bank Investment Management (NBIM) has joined forces with Qatar in opposition of Glencore’s proposed US$30bn merger with miner Xstrata, the Financial Times reported.
NBIM, the manager behind Norway’s sovereign wealth fund, has spent more than US$500m over the past few weeks buying shares of Xstrata, replicating a similar strategy that Qatar Holding has adopted.
NBIM, which is now the fourth largest shareholder with a 2.97 percent interest, is said to have increased its stake after it “privately indicated to both Xstrata and Glencore that it opposed the current terms of the planned merger”, the newspaper said.
Glencore is offering 2.8 percent of its shares for each of Xstrata’s but Qatar, which owns a 12 percent stake in the firm, said it will vote against the deal unless Glencore improves the terms of its offer.
Shareholder advisory firm ISS last week recommended shareholders vote against the takeover after criticising the terms as well as the retention packages offered to senior executives to keep management after the deal.
ISS said proposed packages comes in the wake of a “history of poor pay practices that have taxed shareholder patience” but accepted that the two companies would gain some “marginal strategic upside”.
The criticism followed a day after Glencore chief executive Ivan Glasenberg said he would not overpay for the company, giving the strongest sign yet that he will not cave into Qatar’s demands to increase his offer for Xstrata.
The move has put increasing pressure on Glencore to raise the bid or walk away because the merger needs approval from 75 percent of Xstrata’s shareholders, excluding Glencore. If investors representing more than 16.5 percent of Xstrata’s total shareholding oppose, it would be enough to derail it the deal.
Xstrata and Glencore shareholders are scheduled to vote on the deal on September 7.