Glencore-ENRC Deal Not ‘Easy to Pull Off,’ Citigroup Says

Glencore International Plc, the commodities trader reported to have studied a bid for Eurasian Natural Resources Corp., would struggle to acquire the company because of its ownership structure, Citigroup Inc. said today.

“You’ve got cross-ownership there,” Heath Jansen, an analyst at Citigroup, told reporters in London, saying that Glencore would have to contend with shareholders Kazakhmys Plc (KAZ), which holds a 26 percent stake, and the Kazakh government, with 12 percent. “It’s not an easy transaction to really pull off.”

The London-based Sunday Times reported June 12 that Glencore was studying a 12 billion-pound ($19 billion) takeover offer for ENRC and had held talks with shareholders. Glencore responded in a June 15 statement, saying it’s “not in active consideration of an offer.”

Following the announcement, the U.K. Takeover Panel barred Baar, Switzerland-based Glencore from bidding for ENRC for six months.

“It’s probably a longer-term duration; it will be a big deal for anyone to do,” Jansen said, adding that London-based ENRC would be a “strong fit” for Glencore because of its ferrochrome, iron ore and aluminum assets.

ENRC’s Kazakh founders, Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev, own 15 percent each in the company.

To contact the reporters on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net; Jesse Riseborough in London at jriseborough@bloomberg.net.

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net.

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