Glencore and Xstrata chiefs to reshape empire after merger
The two chieftains at the top of Glencore and Xstrata have carved out their roles in order to avoid a titanic clash of egos in a 57bn merger of their corporate empires.
Mick Davis, who is slated as chief executive of Glenstrata, and has longer experience of running a listed company, is expected to concentrate on investor relations, while Ivan Glasenberg, who floated Glencore on the stock market last year, will focus on trading.
The pair have worked together for many years and are confident they have come up with a division of responsibilities that will play to each of their strengths and avoid clashes.
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Marriage making: Glencore’s Ivan Glasenberg is expected to step into top job
Davis is committed to the new group
for at least three years and will be given incentives to stay for that
period. Glasenberg, who will be the deputy CEO, is thought likely to
step into the top job at a later stage.
Glasenberg will own 9 per cent of the
new group but under a corporate pre-nuptial agreement he and other
Glencore shareholders have given irrevocable undertakings not to mount a
boardroom coup.
Decisions on succession will be made by Xstrata chairman Sir John Bond, who will take on the same role in the merged company.
The companies have devised a
management structure giving autonomy to the senior divisional heads, in
the hope of preserving the entrepreneurial spirit behind both
businesses. Glencore’s operating assets in copper, coal and zinc will be
moved into Xstrata under divisional chief executives. The Xstrata (down
29p at 1184p) heads of production will work in tandem with Glencore’s
heads of marketing for those commodities.
Areas such as agriculture, oil and
aluminium where Xstrata is not currently a player will remain
substantially as they are under Glencore (down 5.7p at 423.55p). A
number of big mining mergers have come adrift in the past due to
difficulties over who will fill the top jobs, including Xstrata’s bid
for Anglo-American and BHP’s attempted merger with Rio Tinto.
The new Glenstrata will also make
efforts to convince the public the merger will not be guilty of harming
the environment or further impoverish people in the developing world.
It will argue that mining companies
create employment along with social programmes, in countries including
Zambia and Burkina Faso where other western businesses do not invest.
Xstrata has been rated top of the Dow Jones sustainability index for its
sector.
A marriage between the two companies
has been on the cards for five years and they are believed to have been
close to a deal at least twice in the past, in 2007 and 2009.
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