Glencore/Rio Tinto merger will happen – banker A London mining banker has told hedge funds to prepare for an all- but-inevitable takeover of Rio Tinto. (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. Author: Matthew Campbell, Dinesh Nair & Jesse Riseborough (Bloomberg) Posted: Tuesday , 25 Nov 2014 “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 isn’t 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. Dealmaking Experience Hannam’s presentation dwelled heavily on his dealmaking experience, describing the banker as “responsible” for 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 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. “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. Rio fell 0.7 percent to 2,955.5 pence by 8:47 a.m. in London trading, valuing it at about $87 billion. Glencore declined 0.3 percent to 331.45 pence, giving it a market value of about $69 billion. Cost Savings 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 11th 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 ($706,000) 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. --With assistance from Ruth David and Aaron Kirchfeld in London and Saijel Kishan in New York. To contact the reporters on this story: Matthew Campbell in London at [email protected]; Dinesh Nair in London at [email protected]; Jesse Riseborough in London at [email protected] To contact the editors responsible for this story: Will Kennedy at [email protected]; Aaron Kirchfeld at [email protected] ©2014 Bloomberg News
Posted on: Fri, 28 Nov 2014 12:21:44 +0000
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