LONDON - Ivan Glasenberg, chief executive of the commodities trading company Glencore, on Tuesday played down speculation that his company would pay a higher price for its proposed $30 billion takeover of the mining giant Xstrata.
Qatar Holding, the Middle Eastern sovereign wealth fund, has increased its stake in Xstrata to around 12 percent since the deal was first announced this year, and is demanding that Glencore increase its bid.
Speaking as part of the company's first half earnings report, Mr. Glasenberg of Glencore questioned the motives of Qatar Holding, the second largest shareholder in Xstrata behind Glencore, for increasing its stake in the mining company. Mr. Glasenberg added that he would not overpay to acquire Xstrata.
“If it doesn't happen, it's not the end of the world,†Mr. Glasenberg told reporters on Tuesday. “It's not the only deal that can be done.â€
The move comes less than a month before Xstrata's investors vote on Sept . 7 on Glencore's all-share offer for the mining company, which would create one of the world's largest commodities firms.
Questions about whether Glencore will increase its offer have dogged the proposed deal since it was first announced earlier this year. A number of shareholders in Xstrata already have balked at Glencore's offer, which includes 2.8 shares in the commodities trader for every share in Xstrata. Qatar Holding, for instance, wants it to increase its bid to 3.25 shares for every Xstrata share.
Glencore already owns a 34 percent stake in the mining company, and the takeover is supported by both companies' boards. The companies need the support of at least 75 percent of their individual shareholders to complete the transaction.
The union of Glencore and Xstrata had been expected for some time. Last year, Glencore raised $10 billion through an initial public offering, saying that it planned to use some of the cash to expand through acquisitions.
Analysts had expected the commodities trader to increase its bid slightly to win investors' support, though Qatar Holding's demands may prove to be too costly.
“We reiterate our view that risk of deal break remains high,†Ash Lazenby, a mining analyst at Liberum Capital in London, said in a research note to investors on Tuesday.
Since the deal was proposed in February, the world's mining companies have been hit by falling demand in many of the world's emerging economies, as the knock-on from the European debt crisis affects global industrial production.
Declining demand for many of the world's commodities has led to a fall in shares prices for both Glencore and Xstrata. Stock in the commodities trader has dropped 23 percent since the acquisition was announced, while shares in Xstrata had fallen 28 percent over the same period.
In the first half of the year, Glencore's net income fell 26 percent, to $1.8 billion, compared to the same period in 2011, beating analysts' estimates.
“We neither anticipate nor assume any material improvement in overall market or economic conditions in the near term,†Mr. Glasenberg said in a statement.
