There had been some speculation that Glencore might need to increase the terms of its offer for mining group Xstrata to win the day, but now analysts proposing the idea have changed their minds.
Jefferies had previously suggested Glencore would probably have to raise its offer from 2.8 to 3 of its shares to win approval from Xstrata investors. Now analyst Christopher LaFemina says:
In light of recent developments, we have become much less convinced that a bump is coming. We now expect the ratio of 2.8 Glencore shares per Xstrata share to succeed.
He listed a number of reasons for the change of heart:
A recent deterioration of seaborne thermal coal fundamentals, significant earnings downgrade risk for Xstrata, geopolitical risk in Peru and Argentina, the risk to Xstrata's copper growth pipeline, the near 10% stake that the Qatar Investment Authority now has in Xstrata, and Xstrata's proposed management retention awards are factors that have reduced the pressure on Glencore to sweeten the terms of its proposed merger with Xstrata.
On top of that, he believed that shareholders who opposed the deal or the retention package had been selling shares and would continue to do so ahead of a vote on 12 July. Those left were likely to be investors who were happy to take part in a Glencore-Xstrata merger.
Meanwhile Glencore chief executive Ivan Glasenberg is continuing to spend his dividend windfall on shares in the company. Having spent £20m so far, he bought another £9.8m worth of shares on Monday at 364.8p each. In the market Glencore is up 2.05p at 365.6p while Xstrata has added 4p to 965.6p.
