The Nordic telecoms group has hired Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) to manage the disposal of its 76 percent stake in Yoigo, the people said, as it exits non-core markets in favor of its Scandinavian heartland and higher-growth central Asia.

Deutsche Bank advised Slim, the world’s richest man and boss of Mexican telco America Movil (AMXL.MX: Quote, Profile, Research, Stock Buzz), on his acquisition late last month of a 27.7 percent stake in Dutch telecom company KPN (KPN.AS: Quote, Profile, Research, Stock Buzz), which attracted overwhelming support from investors.

America Movil has also taken a 23 percent stake in Telekom Austria (TELA.VI: Quote, Profile, Research, Stock Buzz).

Slim, 72, told Reuters last week that he had no immediate plans for further purchases in Europe following the two investments, but the people said that America Movil was likely to at least consider Yoigo because it is an attractive asset.

“I think Slim will take a look, yes. He is opportunistic. What he does or does not do will depend on price,” one of the people said.

The sources also said that Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) and France Telecom (FTE.PA: Quote, Profile, Research, Stock Buzz) were natural bidders for Yoigo because all of Europe’s major telecom groups are looking to scale up in their main markets, while exiting countries where they are weak to cut debt.

If they took out the Spanish player most aggressive on price, both Vodafone and France Telecom would benefit and be more able to compete with market leader Telefonica (TEF.MC: Quote, Profile, Research, Stock Buzz).

Yoigo has won about 5 percent of the Spanish mobile market in the last five years by positioning itself as the low-cost alternative to larger players Telefonica, Vodafone and France Telecom.

It earned 46.5 million euros of earnings before interest, tax, depreciation and amortization (EBITDA) on revenue of 825 million euros in 2011 and has been recruiting new customers as Spain’s recession-weary consumers look for cheaper deals.

Telefonica could also bid for Yoigo, two sources said. But such a move could be tough given the group’s heavy debt and could pose regulatory concerns given that it holds 43 percent of the Spanish mobile market. Vodafone holds 31 percent and France Telecom has a 21 percent market share.

America Movil, Telefonica, Vodafone and Teliasonera declined to comment. Deutsche Bank, France Telecom and Yoigo were not immediately available for comment. ($1 = 0.8160 euros)

(Additional reporting and writing by Leila Abboud; Editing by Erica Billingham)

Telecoms- and technology-focused buyouts group Quadrangle and Goldman Sachs Capital Partners are considering putting the country’s second largest cable company up for sale later this year, or early next year, three people said.

Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) is expected to handle the sale of Get, the people said.

When it launches, the process will join a series of company sales in the Nordic region worth billions of dollars, including Danish retailer Matas.

The cable sector has been one of the hottest for private equity exits since the credit crisis, illustrated by the sales of Germany’s Kabel Baden-Wuerttemberg and Sweden’s Com Hem, both of which attracted fierce competition from rival groups and other private equity houses.

A sale of Get could fetch 1 billion euros or more, the people said, and attract major buyout groups that have long been active in the sector because of its steady growth and cash flows.

UPC, the European division of John Malone’s cable group Liberty Global (LBTYA.O: Quote, Profile, Research, Stock Buzz), could also take an interest in the company, even though it sold the business in 2005 to private equity, one of the people said.

Since then, Get has completed the upgrade of its network infrastructure, switched to digital broadcasting and now reaches about 1 million customers in Norway.

Quadrangle and Goldman Sachs Capital Partners bought Get in 2007 for 724 million euros, from now defunct private equity group Candover.

Quadrangle, Goldman Sachs Capital Partners and Get were not immediately available for comment.

(Editing by Sophie Sassard and David Cowell)

Telecoms- and technology-focused buyouts group Quadrangle
and Goldman Sachs Capital Partners are considering putting the
country’s second largest cable company up for sale later this
year, or early next year, three people said.

Goldman Sachs (GS.N: Quote, Profile, Research) is expected to handle the sale of Get,
the people said.

When it launches, the process will join a series of company
sales in the Nordic region worth billions of dollars, including
Danish retailer Matas. [ID:nL6E816246]

The cable sector has been one of the hottest for private
equity exits since the credit crisis, illustrated by the sales
of Germany’s Kabel Baden-Wuerttemberg and Sweden’s Com Hem, both
of which attracted fierce competition from rival groups and
other private equity houses.

A sale of Get could fetch 1 billion euros or more, the
people said, and attract major buyout groups that have long been
active in the sector because of its steady growth and cash
flows.

UPC, the European division of John Malone’s cable group
Liberty Global (LBTYA.O: Quote, Profile, Research), could also take an interest in the
company, even though it sold the business in 2005 to private
equity, one of the people said.

Since then, Get has completed the upgrade of its network
infrastructure, switched to digital broadcasting and now reaches
about 1 million customers in Norway.

Quadrangle and Goldman Sachs Capital Partners bought Get in
2007 for 724 million euros, from now defunct private equity
group Candover.

Quadrangle, Goldman Sachs Capital Partners and Get were not
immediately available for comment.

(Editing by Sophie Sassard and David Cowell)

((simon.meads@thomsonreuters.com)(+44 20 7542 9969)(Reuters
Messaging: simon.meads.thomsonreuters.com@reuters.net))
Keywords: GET/SALE

(C) Reuters 2012. All rights reserved. Republication or redistribution of
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the Reuters group of companies around the world.

Admirers say Agius showed integrity by placing the good of the bank above his own interest, but as post-mortem criticism of the Diamond era intensifies, his loyalty to the brash American may go down in banking history as his worst failing.

“I deserve blame for being among the first to succumb to the myth of Diamond’s indispensability,” former Barclays CEO Martin Taylor said in a Financial Times column on Monday about whether he himself should have sacked Diamond after a crisis over investments in Russia in 1998.

In a thinly-veiled criticism of Agius, Taylor went on to say that “some in Barclays were still in thrall (to that myth) days ago”, even though the unfolding rate-fixing scandal was making Diamond’s position untenable.

Diamond stepped down the day after Agius did and the outgoing chairman was called back to hold the fort.

While Diamond, 60, has made headlines for years over his bonuses and bold but risky business moves, Agius, 65, was little known to the wider public until this scandal broke.

“If you want to define him, I would say he is the antithesis of brash,” said one former colleague at the investment bank Lazard, where Agius spent 34 years and rose to be chairman of the London arm before he became Barclays chairman in 2007.

“He is charming and impeccably well mannered. He is an old-school banker typical of his generation and very proper. He will not tolerate rudeness or bad manners,” said the colleague.

Educated at Britain’s elite Cambridge University, then at the prestigious Harvard Business School, Agius’s long career at Lazard and his marriage to a member of the Rothschild banking dynasty place him at the heart of London’s business aristocracy.

Always perfectly groomed, he speaks with the accent of Britain’s privileged classes, in a measured but authoritative tone. A member of White’s, one of London’s oldest gentlemen’s clubs, he enjoys skiing, sailing and shooting according to his entry in Debrett’s, the who’s who of British high society.

SHAREHOLDER REVOLT

Far from challenging the get-rich-quick culture of the City of London financial district, he repeatedly approved huge pay packets for the controversial Diamond even though these caused endless bad publicity for Barclays.

In an embarrassing scene, he was heckled and mocked at the bank’s latest Annual General Meeting, in April, as he argued that Barclays had to pay the market rate for an executive of Diamond’s calibre.

Almost 27 percent of Barclays shareholders voted against the decision to grant Diamond 80 percent of his maximum 3.4 million-pound bonus even though, in his own words, 2011 returns had been “unacceptable”.

Agius apologised to shareholders for badly communicating the bank’s pay strategy and promised to “materially” increase dividends, but the shareholder revolt contributes to the emerging picture of a weak chairman who over-indulged Diamond.

Yet several bankers who have worked closely with Agius at Lazard and Barclays told Reuters that he stood out as a man of high moral standards in the fast-and-loose City, using words like “upstanding”, “decent” and “respected” to describe him.

“He is very different from the greed-obsessed generation. He is one of the few bankers that you would always deeply respect and look up to. He is a model for us all,” said one banker, reminiscing about Agius’s considerate management style.

“When I was very junior and still a no-one at Lazard, he wrote good words about me to my boss as I had won a mandate on a very small deal. I was amazed that he noticed and complimented me in a very elegant way.”

But the rate-fixing scandal will undoubtedly leave a stain on this otherwise flattering portrait. Agius will exit Barclays under a cloud and has also resigned from his position as chairman of the British Bankers’ Association (BBA).

The BBA is in charge of compiling the London Interbank Offered Rate or Libor, an interest rate that underpins trillions of dollars’ worth of transactions worldwide, from information submitted by banks.

The revelation that Barclays traders had massaged the figures they submitted to the BBA to try and manipulate Libor was what started the scandal that cost Agius and Diamond their jobs.

(Writing by Estelle Shirbon; editing by Anna Willard)

Admirers say Agius showed integrity by placing the good of the bank above his own interest, but as post-mortem criticism of the Diamond era intensifies, his loyalty to the brash American may go down in banking history as his worst failing.

“I deserve blame for being among the first to succumb to the myth of Diamond’s indispensability,” former Barclays CEO Martin Taylor said in a Financial Times column on Monday about whether he himself should have sacked Diamond after a crisis over investments in Russia in 1998.

In a thinly-veiled criticism of Agius, Taylor went on to say that “some in Barclays were still in thrall (to that myth) days ago”, even though the unfolding rate-fixing scandal was making Diamond’s position untenable.

Diamond stepped down the day after Agius did and the outgoing chairman was called back to hold the fort. On Tuesday, it will be his turn to answer questions by a panel of lawmakers trying to uncover what went wrong at Barclays.

While Diamond, 60, has made headlines for years over his bonuses and bold but risky business moves, Agius, 65, was little known to the wider public until this scandal broke.

“If you want to define him, I would say he is the antithesis of brash,” said one former colleague at the investment bank Lazard, where Agius spent 34 years and rose to be chairman of the London arm before he became Barclays chairman in 2007.

“He is charming and impeccably well mannered. He is an old-school banker typical of his generation and very proper. He will not tolerate rudeness or bad manners,” said the colleague.

Educated at Britain’s elite Cambridge University, then at the prestigious Harvard Business School, Agius’s long career at Lazard and his marriage to a member of the Rothschild banking dynasty place him at the heart of London’s business aristocracy.

Always perfectly groomed, he speaks with the accent of Britain’s privileged classes, in a measured but authoritative tone. A member of White’s, one of London’s oldest gentlemen’s clubs, he enjoys skiing, sailing and shooting according to his entry in Debrett’s, the who’s who of British high society.

SHAREHOLDER REVOLT

Far from challenging the get-rich-quick culture of the City of London financial district, he repeatedly approved huge pay packets for the controversial Diamond even though these caused endless bad publicity for Barclays.

In an embarrassing scene, he was heckled and mocked at the bank’s latest Annual General Meeting, in April, as he argued that Barclays had to pay the market rate for an executive of Diamond’s caliber.

Almost 27 percent of Barclays shareholders voted against the decision to grant Diamond 80 percent of his maximum 3.4 million-pound ($5.3 million) bonus even though, in his own words, 2011 returns had been “unacceptable”.

Agius apologized to shareholders for badly communicating the bank’s pay strategy and promised to “materially” increase dividends, but the shareholder revolt contributes to the emerging picture of a weak chairman who over-indulged Diamond.

Yet several bankers who have worked closely with Agius at Lazard and Barclays told Reuters that he stood out as a man of high moral standards in the fast-and-loose City, using words like “upstanding”, “decent” and “respected” to describe him.

“He is very different from the greed-obsessed generation. He is one of the few bankers that you would always deeply respect and look up to. He is a model for us all,” said one banker, reminiscing about Agius’s considerate management style.

“When I was very junior and still a no-one at Lazard, he wrote good words about me to my boss as I had won a mandate on a very small deal. I was amazed that he noticed and complimented me in a very elegant way.”

But the rate-fixing scandal will undoubtedly leave a stain on this otherwise flattering portrait. Agius will exit Barclays under a cloud and has also resigned from his position as chairman of the British Bankers’ Association (BBA).

The BBA is in charge of compiling the London Interbank Offered Rate or Libor, an interest rate that underpins trillions of dollars’ worth of transactions worldwide, from information submitted by banks.

The revelation that Barclays traders had massaged the figures they submitted to the BBA to try and manipulate Libor was what started the scandal that cost Agius and Diamond their jobs. ($1 = 0.6442 British pounds)

(Writing by Estelle Shirbon; editing by Anna Willard)

Admirers say Agius showed integrity by placing the good of
the bank above his own interest, but as post-mortem criticism of
the Diamond era intensifies, his loyalty to the brash American
may go down in banking history as his worst failing.

“I deserve blame for being among the first to succumb to the
myth of Diamond’s indispensability,” former Barclays CEO Martin
Taylor said in a Financial Times column on Monday about whether
he himself should have sacked Diamond after a crisis over
investments in Russia in 1998.

In a thinly-veiled criticism of Agius, Taylor went on to say
that “some in Barclays were still in thrall (to that myth) days
ago”, even though the unfolding rate-fixing scandal was making
Diamond’s position untenable.

Diamond stepped down the day after Agius did and the
outgoing chairman was called back to hold the fort. On Tuesday,
it will be his turn to answer questions by a panel of lawmakers
trying to uncover what went wrong at Barclays.

While Diamond, 60, has made headlines for years over his
bonuses and bold but risky business moves, Agius, 65, was little
known to the wider public until this scandal broke.

“If you want to define him, I would say he is the antithesis
of brash,” said one former colleague at the investment bank
Lazard, where Agius spent 34 years and rose to be chairman of
the London arm before he became Barclays chairman in 2007.

“He is charming and impeccably well mannered. He is an
old-school banker typical of his generation and very proper. He
will not tolerate rudeness or bad manners,” said the colleague.

Educated at Britain’s elite Cambridge University, then at
the prestigious Harvard Business School, Agius’s long career at
Lazard and his marriage to a member of the Rothschild banking
dynasty place him at the heart of London’s business aristocracy.

Always perfectly groomed, he speaks with the accent of
Britain’s privileged classes, in a measured but authoritative
tone. A member of White’s, one of London’s oldest gentlemen’s
clubs, he enjoys skiing, sailing and shooting according to his
entry in Debrett’s, the who’s who of British high society.

SHAREHOLDER REVOLT

Far from challenging the get-rich-quick culture of the City
of London financial district, he repeatedly approved huge pay
packets for the controversial Diamond even though these caused
endless bad publicity for Barclays.

In an embarrassing scene, he was heckled and mocked at the
bank’s latest Annual General Meeting, in April, as he argued
that Barclays had to pay the market rate for an executive of
Diamond’s calibre.

Almost 27 percent of Barclays shareholders voted against the
decision to grant Diamond 80 percent of his maximum 3.4
million-pound ($5.3 million) bonus even though, in his own
words, 2011 returns had been “unacceptable”.

Agius apologised to shareholders for badly communicating the
bank’s pay strategy and promised to “materially” increase
dividends, but the shareholder revolt contributes to the
emerging picture of a weak chairman who over-indulged Diamond.

Yet several bankers who have worked closely with Agius at
Lazard and Barclays told Reuters that he stood out as a man of
high moral standards in the fast-and-loose City, using words
like “upstanding”, “decent” and “respected” to describe him.

“He is very different from the greed-obsessed generation. He
is one of the few bankers that you would always deeply respect
and look up to. He is a model for us all,” said one banker,
reminiscing about Agius’s considerate management style.

“When I was very junior and still a no-one at Lazard, he
wrote good words about me to my boss as I had won a mandate on a
very small deal. I was amazed that he noticed and complimented
me in a very elegant way.”

But the rate-fixing scandal will undoubtedly leave a stain
on this otherwise flattering portrait. Agius will exit Barclays
under a cloud and has also resigned from his position as
chairman of the British Bankers’ Association (BBA).

The BBA is in charge of compiling the London Interbank
Offered Rate or Libor, an interest rate that underpins trillions
of dollars’ worth of transactions worldwide, from information
submitted by banks.

The revelation that Barclays traders had massaged the
figures they submitted to the BBA to try and manipulate Libor
was what started the scandal that cost Agius and Diamond their
jobs.

Glencore, Xstrata’s top shareholder with an almost 34 percent stake, is offering 2.8 new shares for every Xstrata share held.

Qatar – whose sovereign wealth fund has built an 11 percent stake in Xstrata since the planned takeover was announced in February – is demanding an improved ratio of 3.25.

“I cannot talk about it because it’s under negotiation now, but what I can say is our position is firm,” Sheikh Hamad bin Jassim al-Thani, the Qatari prime minister who is also chairman of Qatar Holding, said on the sidelines of a London event.

“We look after Xstrata and all the shareholders of Xstrata, and we think it’s good to merge the two companies. It will be positive for both sides, but at the right price.”

Al-Thani, in London for the inauguration of the city’s dramatic Shard tower, funded by the oil-rich Gulf state’s deep pockets, declined to comment further.

Qatar has held shares in Xstrata since January last year, but has been building its position aggressively since the Glencore takeover was announced in February.

It surprised the market last week, after months of silence, with a rare public demand for an improved offer.

Glencore and Qatar, now a key stumbling block in the path of the trader’s ambition to create a mining and trading powerhouse, have already held talks and more negotiations are due.

But sources involved in the negotiations said on Thursday there was little sign of either party shifting.

If Qatar refuses to back the deal and Glencore does not yield, the tie-up would be put on ice for this year at least – an outcome that has risks for all sides, analysts and sources familiar with the matter say.

“Ivan (Glasenberg) is still sticking to his original negotiating position, he will not overpay and he thinks 2.8 is the right price,” one source involved in the negotiations said, referring to Glencore’s chief executive.

“It is not looking like we are going to get a short-term resolution on this, and there are no indications yet (that) the Qataris will move.”

Both sides are still working towards a tie-up to create a mining and trading giant and several sources said it was still too soon to say they had decided to shelve the deal.

“It is important for both of these companies for the merger to happen, but the question who is willing to be flexible,” analyst Chris LaFemina at Jefferies said.

“Part of the problem is we don’t know how flexible each side is willing to be. Who is going to blink first?”

(Writing and reporting by Clara Ferreira-Marques; Editing by David Cowell)

The former Zurich Financial Services executive
will take up his post on August 1, replacing Giovanni
Perissinotto, who was ousted by the board for losing the support
of top shareholder Mediobanca.

“I don’t think the process will start until after he
arrives, but they want to have something ready for him to sell,”
one of the sources said.

Perissinotto was ousted because Mediobanca and other
investors were unhappy about Generali’s performance. The insurer
has been hit hard by the deepening of the euro zone crisis and
by its large holding of Italian bonds.

BSI is no longer a core asset for Generali, the sources
said, and the insurer hopes to make between $1 billion and $2
billion from the sale, roughly equivalent to 1 percent to 3
percent of assets under management.

Swiss private banking group Julius Baer is an
obvious suitor for BSI once the process gets under way because
it has considered buying the business in the past, the sources
added.

Baer was reported last month to be in talks with Bank of
America Merrill Lynch about buying its non-US wealth
management business, which is valued at about $2 billion.

JP Morgan declined to comment. Generali and BSI could not
immediately be reached for comment.

(Additional reporting by Martin de Sa’Pinto in Zurich; Editing
by David Goodman)

Bankers involved in the transaction have already flown out to the oil-rich Gulf state as the companies roll up their sleeves for what one person familiar with the matter described as a “poker game”.

The talks will pit Glencore’s strong-willed chief executive Ivan Glasenberg against Qatar Holding’s “iron man” Ahmad al-Sayed, who has built up a stake of nearly 11 percent in Xstrata since the Glencore deal was announced in February.

Qatar, which started investing in Xstrata in January last year, is now the second biggest shareholder in the miner after Glencore with nearly 34 percent.

“There is more brinksmanship to come. Things will go quiet for the next few weeks while they see if they can work out a compromise. Ivan may budge a little bit, but he won’t roll over,” said another person familiar with the matter.

An initial meeting in London this week ended with both sides entrenched in their original positions, the person added.

Glencore indicated it would not budge from its original offer of 2.8 new shares for each existing Xstrata share and Qatar Holding, the investment arm of the Qatar Investment Authority, said it would not accept less than the 3.25 new shares it had demanded in a rare public statement.

Pressure to reach a deal with shareholders this week eased after changes to retention payments for Xstrata executives forced Glencore and Xstrata to delay votes on the deal, but sources familiar with the matter say all sides are still keen to resolve the matter swiftly.

Finding common ground, though, could take time.

“The focus is on getting the deal done but there are some strong personalities involved,” another source familiar with the matter said.

“Ivan is going to do what it takes to get a good deal and of course Qatar are in it for the long term (so could hold firm) … It is a case of who blinks first.”

The majority of market observers think the deal will ultimately proceed, however, with the consensus expecting both sides to yield a little and agree an improved ratio of around three new shares for each current Xstrata share.

Sources differ on whether they believe Glencore would be pushed to a ratio of three or above, potentially preferring a face-saving number just below.

Glencore’s share price closed trading on Friday up 0.7 percent at 295.55 pence, while Xstrata’s was up 0.6 percent at 798.6 pence.

“We expect the merger to go ahead as the financial downside for all parties is too great,” said Dominic O’Kane, an analyst at Liberum in London.

O’Kane believes that Glencore could benefit by delaying a shareholder vote on an improved offer until after Xstrata’s first half results on August 7.

He expects that the miner’s first-half earnings will show a decline of around 50 percent year-on-year, reducing pressure on Glencore to increase its offer.

Others analysts question this, arguing Glencore itself will be hit by the same price drop.

Analysts at Canaccord Genuity said it thought a ratio of 3 could “see the deal home”, although it said it was also feasible that Glencore could dig in at 2.8.

One British hedge fund manager agreed, citing Glencore’s decision as the largest shareholder in Xstrata to reject Brazilian miner Vale’s (VALE5.SA: Quote, Profile, Research, Stock Buzz) cash and share offer for Xstrata in 2008 as evidence that Glencore’s reputation as a consummate dealmaker was not always inviolate.

“Glencore has done irrational things in the past,” the hedge fund manager said.

Vale end Xstrata could not agree terms even after the Brazilian giant hiked its offer to $90 billion from an initial, informal $76 billion. A key hurdle was disagreement between Glencore and Vale over marketing rights of the combined entity’s raw materials.

The deal collapsed because, in the words of Vale’s then chief executive Roger Agnelli neither side would “give in”.

Xstrata’s share price has fallen sharply in the intervening years, which has seen the financial crisis and subsequent shock waves batter the sector.

Failure of the current deal could also cause a drop in Xstrata’s shares, according to analysts.

They and other sources point to a downside for Glencore too if the deal collapses, not least due to its own exposure to commodity prices that will weaken its acquisition currency.

Without a deal, analysts see pressure on its credit default swaps – the cost of insuring against default – and on a balance sheet that would have benefitted from cash generated by Xstrata’s operations.

Adding to this, if Glencore comes back in a year or six months, it will have the same Qatari hurdle to overcome.

“If Ivan walks away and comes back in a year, Qatar will still be there. They are not going away,” another person familiar with the matter said.

“This is not a hedge fund. They are not agitators,” the person added, referencing reactions to Qatar’s public opposition to the deal that have likened the wealth fund’s behavior to that of activist, short-term investors.

(Editing by Greg Mahlich)

Bankers involved in the transaction have already flown out
to the oil-rich Gulf state as the companies roll up their
sleeves for what one person familiar with the matter described
as a “poker game”.

The talks will pit Glencore’s strong-willed chief executive
Ivan Glasenberg against Qatar Holding’s “iron man” Ahmad
al-Sayed, who has built up a stake of nearly 11 percent in
Xstrata since the Glencore deal was announced in February.

Qatar, which started investing in Xstrata in January last
year, is now the second biggest shareholder in the miner after
Glencore with nearly 34 percent.

“There is more brinksmanship to come. Things will go quiet
for the next few weeks while they see if they can work out a
compromise. Ivan may budge a little bit, but he won’t roll
over,” said another person familiar with the matter.

An initial meeting in London this week ended with both sides
entrenched in their original positions, the person added.

Glencore indicated it would not budge from its original
offer of 2.8 new shares for each existing Xstrata share and
Qatar Holding, the investment arm of the Qatar Investment
Authority, said it would not accept less than the 3.25 new
shares it had demanded in a rare public statement.

Pressure to reach a deal with shareholders this week eased
after changes to retention payments for Xstrata executives
forced Glencore and Xstrata to delay votes on the deal, but
sources familiar with the matter say all sides are still keen to
resolve the matter swiftly.

Finding common ground, though, could take time.

“The focus is on getting the deal done but there are some
strong personalities involved,” another source familiar with the
matter said.

“Ivan is going to do what it takes to get a good deal and of
course Qatar are in it for the long term (so could hold firm)
… It is a case of who blinks first.”

The majority of market observers think the deal will
ultimately proceed, however, with the consensus expecting both
sides to yield a little and agree an improved ratio of around
three new shares for each current Xstrata share.

Sources differ on whether they believe Glencore would be
pushed to a ratio of three or above, potentially preferring a
face-saving number just below.

Glencore’s share price closed trading on Friday up 0.7
percent at 295.55 pence, while Xstrata’s was up 0.6 percent at
798.6 pence.

“We expect the merger to go ahead as the financial downside
for all parties is too great,” said Dominic O’Kane, an analyst
at Liberum in London.

O’Kane believes that Glencore could benefit by delaying a
shareholder vote on an improved offer until after Xstrata’s
first half results on Aug. 7.

He expects that the miner’s first-half earnings will show a
decline of around 50 percent year-on-year, reducing pressure on
Glencore to increase its offer.

Others anlaysts question this, arguing Glencore itself will
be hit by the same price drop.

Analysts at Canaccord Genuity said it thought a ratio of 3
could “see the deal home”, although it said it was also feasible
that Glencore could dig in at 2.8.

One British hedge fund manager agreed, citing Glencore’s
decision as the largest shareholder in Xstrata to reject
Brazilian miner Vale’s cash and share offer for
Xstrata in 2008 as evidence that Glencore’s reputation as a
consummate dealmaker was not always inviolate.

“Glencore has done irrational things in the past,” the hedge
fund manager said.

Vale end Xstrata could not agree terms even after the
Brazilian giant hiked its offer to $90 billion from an initial,
informal $76 billion. A key hurdle was disagreement between
Glencore and Vale over marketing rights of the combined entity’s
raw materials.

The deal collapsed because, in the words of Vale’s then
chief executive Roger Agnelli neither side would “give in”.

Xstrata’s share price has fallen sharply in the intervening
years, which has seen the financial crisis and subsequent shock
waves batter the sector.

Failure of the current deal could also cause a drop in
Xstrata’s shares, according to analysts.

They and other sources point to a downside for Glencore too
if the deal collapses, not least due to its own exposure to
commodity prices that will weaken its acquisition currency.

Without a deal, analysts see pressure on its credit default
swaps – the cost of insuring against default – and on a balance
sheet that would have benefitted from cash generated by
Xstrata’s operations.

Adding to this, if Glencore comes back in a year or six
months, it will have the same Qatari hurdle to overcome.

“If Ivan walks away and comes back in a year, Qatar will
still be there. They are not going away,” another person
familiar with the matter said.

“This is not a hedge fund. They are not agitators,” the
person added, referencing reactions to Qatar’s public opposition
to the deal that have likened the wealth fund’s behaviour to
that of activist, short-term investors.

(Editing by Greg Mahlich)