What was interpreted by many as a final proposal from Glencore last Friday has been tweaked yet again.
In a high-stakes game of hokey-cokey, Mick Davis, who had been shunted out of the chief executive’s job in Glencore’s last attempt to win over shareholders, is back in again — at least for a few months. No matter. This last-minute change is little more than a figleaf to spare the blushes of Xstrata’s directors, who should find the deal backable.
It does seem strange that the miner is being sacrificed by the trader in the creation of a business that will derive the bulk of its revenues from mining.
But when Ivan Glasenberg’s Glencore already owns 34% of Xstrata, it was clear from the outset who wore the trousers in this putative marriage. The City should not be surprised: mergers of equals with two bosses attempting to play happy families for the cameras never work — even though this pair go way back to Witwatersrand University in South Africa, where Davis lectured in accountancy and Glasenberg studied.
Going forward, Glencore needs to demonstrate it has enough mining expertise at the top of the company — especially as the commodities boom cools off.
Maybe that giant incentive plan for Xstrata managers is a good idea after all.
