Glencore downplays regulatory hurdle to Xstrata takeover

Glencore International plc on Tuesday, March 5, set a new deadline of April 16 to complete its long delayed $34 billion takeover of Xstrata plc, as CEO Ivan Glasenberg denied that the longer scrutiny was a sign of potential regulatory resistance to future acquisitions.

Glencore, the world's largest commodity trader, is still waiting on approval for its Xstrata deal from China's Ministry of Commerce, or Mofcom, but said it was confident of meeting the new deadline.

"There is a weekly dialogue with Mofcom," Glasenberg said Tuesday at Glencore's annual results presentation. The former trader, who is the future CEO of the combined Glencore and Xstrata, added that he was unsure what "final remedies" the Chinese might impose on the deal but insisted "we will overcome them."

Glencore has now delayed its takeover of Xstrata four times, twice because of Xstrata shareholder resistance to its offer and twice because of regulatory issues. Xstrata shareholders approved the all-share deal in November. Glencore initially hoped to finalize its takeover of Xstrata by the end of December but regulatory delays in South Africa and then in China forced a rethink.

Glencore denied that the delays were due to regulatory concerns about its influence on commodity markets and insisted that the threat of regulator scrutiny will not be a consideration in future deals. Baar, Switzlerland-based Glencore will become the world's No. 4 mining company when it takes control of Xstrata.

"We were overly optimistic," Glencore CFO Steven Kalmin told the results conference. "This is just how long these things take now."

Glasenberg said that the company could consider acquiring large commodity producers in the future and that the addition of Xstrata would give it a more balanced portfolio, allowing it to look anew at deals in Africa and South America. He also hinted that he may be prepared to offload Xstrata's greenfield operations - or projects in areas which were hitherto undeveloped. "We are afraid of greenfields," he said.

Glencore's 2012 net profit excluding exceptional items was down 25% year-on-year in 2012 to $3.06 billion, while net profit including writedowns on assets fell to $1 billion, a decline of 75%.

Xstrata on Tuesday also posted a sharp fall in net profit excluding exceptional items, which fell to $3.65 billion from $5.79 billion a year earlier. Net profit tumbled to $1.18 billion from $5.7 billion, pushed lower by an $840 million writedown of its stake in platinum producer Lonmin plc and almost $1 billion of writedowns at its zinc and nickel operations.

Glencore shares traded Tuesday at 382 pence ($5.75), up 12 pence, or just over 3%, on their Tuesday close. Xstrata shares traded at 1,144 pence, up 45 pence, or just over 4%.