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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, 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.

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