Fiery CEOs may clash in Glencore-Xstrata talks

Thu Feb 2, 2012 3:51pm EST
 
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By Eric Onstad

LONDON (Reuters) - As a tie-up between trader Glencore and miner Xstrata is hammered out in coming days there is plenty of scope for hard bargaining between the two sides' highly competitive South African bosses.

Glencore's Ivan Glasenberg and Xstrata's Mick Davis -- both hard-driven, keen sportsmen who climbed the corporate ladder in the South African coal industry -- have had a close and sometimes tense relationship for more than a decade.

Glasenberg hand-picked Davis to run Xstrata 11 years ago. Xstrata floated in 2002, after buying up key Glencore coal assets, leaving the trader with a 34 percent stake.

"They clearly have a history together, as do Xstrata and Glencore, and I would expect nothing less than that they try to drive the best bargain for their shareholders," said analyst Jeff Largey at investment bank Macquarie in London.

One key element of Glencore's move on Xstrata -- which is being billed as a "merger of equals" -- is who gets to run the enlarged trader and miner.

The new company will get the bulk of its revenue from mining, leaving Davis as the obvious choice for the top job, while others point out that Glasenberg, who has said he does not plan to sell shares, is unlikely to step aside.

This has left some skeptical about whether the two brash characters would be able to work together in a combined company.

"I don't think both will stay in a fully merged entity. Both have made so much money and I would not be surprised if one of them goes," said a senior investment banker familiar with the mining sector. "Mick is more likely to be the one that moves."   Continued...