BlackRock’s Raw Supports Glencore’s $34 Billion Xstrata Bid
BlackRock Inc. (BLK) fund manager Catherine Raw, who helps manage the firm’s $14 billion World Mining Fund, said she supports Glencore International Plc (GLEN)’s 21.3 billion pound ($34 billion) bid for Xstrata Plc. (XTA)
“If you were to ask me today whether or not the natural resources team would accept the offer, then yes, we would,” Raw, who co-manages the fund with Evy Hambro, said today in an interview in Hong Kong. BlackRock is the largest shareholder in Xstrata after Glencore with about 6 percent, and holds about 1.6 percent of Glencore.
The comments are the first time a fund manager from BlackRock, the world’s biggest money manager, has expressed a view on the bid since it was announced on Feb. 7. Glencore, the largest publicly traded commodity supplier, already owns 34 percent of Xstrata and agreed to buy the company for 2.8 of its shares for each one in Xstrata.
“There are other holders in BlackRock that just own Xstrata or just own Glencore, so there are differing views across the firm as to whether or not the deal is a good one,” she said. “In terms of the natural resources team’s view, we see the joint entity as being a better solution for both companies.”
Glencore, based in Baar, Switzerland, has faced calls from Xstrata investors including Schroders Plc (SDR), Fidelity Worldwide Investment and Standard Life Plc (SL/) to raise its bid. The transaction would create the fourth-largest mining company.
The commodities supplier declined by 3.1 percent to close at 389.25 pence in London trading. Zug, Switzerland-based Xstrata dropped 3.4 percent to 1,068.5 pence.
Glencore has said it hopes to complete the takeover of Xstrata by the third quarter. Official documents for the deal may be posted in late April, triggering an extraordinary general meeting for Xstrata shareholders, Liberum Capital Ltd. said March 13.
Investors holding 16.48 percent of Xstrata can succeed in voting to block the deal. That’s because the U.K. takeover code prevents Glencore from voting its stake in Xstrata, putting the final decision into the hands of the shareholders who control the rest of the company.
Glencore Chief Executive Officer Ivan Glasenberg said March 5 the all-share offer is a “fair price,” rebuffing calls from some investors to raise it.
The deal “has been negotiated for a long time, fully accepted by Xstrata’s CEO and unanimously accepted by their board, so therefore that’s the price,” Glasenberg, 55, said. “I’m a little lost why people are expecting us to pay a bigger premium than what has been put on the table.”