| Kippreport.com

Xstrata investor backs Qatar proposal for better deal

July 4, 2012 12:07 by Reuters

Activist fund Knight Vinke, a top-20 shareholder in miner Xstrata, said on Tuesday it supported a surprise call from fellow investor Qatar for better terms in a takeover offer from commodities trader Glencore .

Glencore, Xstrata’s top shareholder, is currently offering 2.8 new shares for every Xstrata share held. Qatar, which has built a stake of around 11 percent in the miner, said last week it would demand a ratio of 3.25 in order to back the deal.

Knight Vinke said in a statement that the deal does not represent fair value for Xstrata on current terms and also objected to the fact no premium is being paid for a change of control.

“The combination of these two factors leads Knight Vinke to support the comments of other large shareholders that an exchange ratio of 3.25 would represent more appropriate terms,” it said, adding it will vote against a deal based on the current ratio of 2.8.

“If the board of Glencore is unwilling to pay for acquiring the control it seeks, we would support Xstrata’s continuing independence as a fundamentally strong and successful business – and one which would be likely to attract a significant premium was there subsequently to be interest from third parties.”

Tags: Activist fund Knight Vinke, Glencore, Xstrata