Johannesburg-born and bred Ivan Glasenberg has built Glencore into a global mining giant through hard work, a laser-like focus, rational capital allocation and bold acquisitions. After making his intentions clear with a rebuffed approach, once the legislated six month cooling off period ends, he is likely to land his biggest prize yet. At a meeting in London this week, insiders explained how Glencore’s takeover of Rio Tinto is simply a matter of time. With that deal Glasenberg would create a giant even bigger than Australia’s BHP Billiton. That deal would bring him another new title – usurping US-based tech entrepreneur Elon Musk as South Africa’s most successful business expat. – AH
By Matthew Campbell, Dinesh Nair and Jesse Riseborough
Nov. 25 (Bloomberg) — Hedge funds including GLG Partners, DE Shaw & Co, and Pentwater Capital Management were told this month by a prominent London mining banker to prepare for an all- but-inevitable takeover of Rio Tinto Group by Glencore Plc, according to people familiar with the meeting.
Former JPMorgan Chase & Co. dealmaker Ian Hannam, who now runs a boutique advisory firm, convened representatives of more than 20 investors at Corrigan’s Mayfair restaurant in the British capital in mid-November to share his views on the potential deal, the people said, asking not to be identified discussing a private matter. The meeting was intended in part to help position Hannam’s firm, Hannam & Partners, to win a role in the transaction, the people said.
“If not today, this deal will happen sometime in the near future,” Hannam said in his presentation, according to a copy seen by Bloomberg. “Glencore is M&A savvy and times deals well. The combination will create a super-major with a diversified portfolio of world-class mining assets.”
Neil Passmore, chief executive officer of Hannam & Partners, said the firm is not working for Glencore or Rio Tinto, nor is it in discussions to do so. Spokesmen for Rio Tinto and Glencore declined to comment, as did representatives for Pentwater and DE Shaw. GLG couldn’t be immediately reached. The three funds have more than $70 billion in assets under management, according to their websites and regulatory filings.
Hannam’s presentation dwelled heavily on his dealmaking experience, describing the banker as “responsible” for the the merger of BHP Ltd. and Billiton Plc that created the world’s largest mining company. It also highlighted his work alongside Xstrata Plc, which he advised on its 2012 takeover by Glencore and on earlier transactions.
Baar, Switzerland-based Glencore said last month it had abandoned a bid for Rio Tinto after a July proposal to create the world’s largest miner, worth about $160 billion, was rebuffed. The company made the statement after Bloomberg News reported it was laying the groundwork for a potential merger in the next year.
Material Premium
“Rio’s shareholders will demand a material premium,” the presentation said, under a subheading entitled “Headwinds.” Other obstacles could include Glencore’s relatively high level of debt and winning approval from antitrust regulators, it said.
Hannam’s presentation predicted potential cost savings from a deal would be $1.8 billion, due largely to assumed benefits of selling Rio Tinto’s resources through Glencore’s trading network.
Investor opinion proved decisive in Glencore’s last major deal, the $29 billion Xstrata acquisition. Qatar’s sovereign wealth fund built a stake of almost 12 percent in the target company after the deal was announced, forcing Glencore CEO Ivan Glasenberg to raise his all-share bid at the eleventh hour to win its support.
A stalwart of London’s mining world and former captain in the U.K.’s army reserve, Hannam is one of the city’s more prominent investment bankers. He was fined 450,000 pounds ($706,848) by the U.K. market regulator two years ago for market abuse after he was alleged to have e-mailed a potential customer in 2008 with details of a bid for his client, Heritage Oil Plc. After the fine was imposed he stepped down from his post at JPMorgan, where he had been chairman of global capital markets – BLOOMBERG
