Sunday newspaper round-up: Glencore, Euro, Anglo American

19th Aug 2012 19:21

The Qatari state investment fund has pushed the world's largest merger, between Glencore and Xstrata, to the brink of collapse this weekend after building up a stake nearly large enough to block the deal. Qatar Holding, the financial vehicle of the gas-rich emirate, spent more than 5bn dollars on Xstrata shares to make it the second-largest investor ? Glencore owns 34 per cent ? before demanding improved terms. It has vowed to vote against the deal unless Glencore offers at least 3.25 shares for each Xstrata share, rather than the agreed 2.8 ratio. Glencore has so far refused to budge. Ivan Glasenberg, its chief executive, has hardened his stance as commodity prices have fallen. Qatar did not own a large enough stake to block the deal on its own. Over the past fortnight, however, it has been buying shares almost every day. As of Friday, its stake was 11.7%. Bankers said it could block the deal on its own with as little as 12 per cent because Glencore is barred from voting on the deal, writes The Sunday Times.Lord Rothschild has taken a near-£130m bet against the euro as fears continue to grow that the single currency will break up. The fact that the former investment banker, a senior member of the Rothschild family, has taken such a view will be seen as a further negative for the currency. RIT Capital Partners, the investment trust which Lord Rothschild has led since 1988, had a -7% net short position in terms of principal currency exposures on the euro at the end of July, up from -3% at the end of January. Given a net asset value of £1.836bn at the end of July, the position is worth £128m. Sources close to RIT suggested that the position was not a dogmatic negative view on the euro as a currency, but rather a realistic approach on a currency that remains relatively weak, The Sunday Telegraph says. Daniel Pirron, a partner in Delloite's key General Counsel's office in New York, was found dead in a car park near his home in Trumbull, Connecticut. On August 6, Deloitte was accused by the New York Department of Financial Services of aiding Standard Chartered in its "deception" over billions of dollars' worth of trades involving Iran. Mr Pirron apparently took his own life seven days later. Deloitte denies the DFS allegations that have led to Standard Chartered agreeing to pay a fine of $340m. Speaking publicly for the first time about the incident, Mr Pirron's brother, Mike, said the family believed the two events were connected and that Daniel Pirron had warned his daughters the day before his death that there was "big trouble" ahead, The Sunday Telegraph reports. Revised economic figures due for publication this week are expected to show that the UK's recession was not as deep as initially feared during the second quarter, boosting hopes that the economy will return to growth later this year. Economists believe that preliminary estimates of the downturn in the construction and industrial sectors will be revised upwards after official statisticians overestimated the impact of the extra Diamond Jubilee bank holiday in June. Chris Williamson, chief economist at Markit, said: "A smaller than previously thought drop in industrial production and construction output in the second quarter means GDP looks to have fallen 0.5%, instead of the 0.7% drop originally estimated." The economy has been shrinking since late 2011 and preliminary figures released last month showed a steeper-than-expected 0.7% drop in output for the second quarter. Much of the fall was attributed to weakness in the UK's construction sector, which suffered a 5.2% quarter-on-quarter slump in output, according to The Scotsman.FirstGroup will press ahead with bids for three other major UK rail contracts this year after its successful £10bn offer for the West Coast franchise. In an interview with The Sunday Telegraph, Tim O'Toole, FirstGroup chief executive, also hit back at criticism by Sir Richard Branson, whose Virgin Rail Group lost out to FirstGroup, despite having operated West Coast services between London and Scotland for 15 years. FirstGroup is in the running for the Great Western, Essex Thameside and Thameslink franchises, which will be decided in January. Mr O'Toole said the company's next three offers would reflect the fact "we have prevailed on West Coast already". "We have pre-qualified for all of the first four. We will continue to pursue that process and make decisions that make sense." Mr. O'Toole said Sir Richard - who claimed FirstGroup's bid ran the risk of "almost certain bankrupcy" - was guilty of "histrionics".The world's third-biggest platinum miner, Lonmin, is considering a $1bn (£640m) rescue rights issue after 34 people were shot dead in clashes between striking workers and South African police. The firm has been forced to shut down operations at its biggest mine, the giant Marikana complex in South Africa, after workers launched a wildcat strike nine days ago. Violence boiled over on Thursday when police opened fired with machineguns. The massacre was the bloodiest incident since the end of apartheid and prompted President Jacob Zuma to announce an inquiry. Lonmin was within months of breaching banking covenants even before the shutdown, analysts said. Platinum prices have collapsed over the past year as demand has dried up from European carmakers, which use the metal in exhaust systems and other components. Lonmin's profits in the first half of the year plunged 90%, The Sunday Times says. A tycoon from Sheffield is threatening to put into administration the company that owns the €2bn (£1.6bn) Madrid headquarters of the Santander banking group. Glenn Maud, a 54-year-old lawyer turned property investor, is understood to have made the threat after a legal row with Sheikh Mansour, the owner of Manchester City football club, who could lose €200m as a result. The complicated feud is set to explode in the new few weeks. Santander may be forced to buy back the complex ? which includes a hotel and an 18-hole golf course designed by Seve Ballesteros, The Sunday Times says. Anglo American could strike a deal this week to hand a stake in one of the world's biggest copper mines to Chile at a discount of several billion dollars. The Los Bronces project in Chile is the fifth-largest source of copper in the world. Last October, Codelco, the state-controlled mining company, exercised an option to buy 49% of Anglo American Sur, owner of Los Bronces, for $5.6bn.The price, determined by a pre-arranged formula under a long-held contract with Anglo, represented a big discount to market value. But before Codelco could consummate the purchase, Anglo sold half of that stake to Mitsubishi of Japan for $5.4bn. The sale implied an overall value of $22bn, as opposed to $11bn under the Codelco deal. Codelco sued, claiming that the sale was illegal. Anglo countersued. Now Anglo is considering selling 24.5% to Codelco at a deep discount to the original, below-market valuation, The Sunday Times reports. AB