Xstrata Plc is trading at a record discount to commodity trader Glencore International Plc’s 20.1 billion-pound ($31.8 billion) bid, suggesting investors increasingly believe this year’s biggest takeover will fail.
Glencore International AG, the world’s largest commodity trader, is studying a merger with Xstrata Plc as a way of restructuring its ownership and improving access to capital, according to two people familiar with the matter.
Xstrata Plc, the world’s largest exporter of thermal coal, is seeking a waiver on terms of a $6 billion loan to allow it to remain in place for the duration of its proposed merger with Glencore International Plc.
Fidelity Worldwide Investment said that while it supports Glencore International Plc’s 23.8 billion-pound ($37.5 billion) takeover bid for Xstrata Plc “in principle,” the terms of the deal “need to be revisited.”
BHP Billiton Ltd. and Xstrata Plc’s expansion and acquisitions plans may stall on Australia’s plan to increase taxes on mining companies, whose profits have surged A$80 billion ($74 billion) in the past decade.
Zijin Mining Group Co. , buying Indophil Resources NL , said a ban on open-pit mining by a local government in the Philippines adds “uncertainties” to the Tampakan project owned by the Australian company and Xstrata Plc.