Glencore down 5% after Xstrata raised
Commodities giant Glencore remained at the bottom of London’s leading shares index today after it raised its offer for Xstrata to keep hopes of a £56bn mega-merger alive.
Glencore fell 5% after it upped its bid to 3.05 shares for every Xstrata share, 9% higher than its previous offer of 2.8 shares, which met opposition from investors.
The wider FTSE 100 Index made modest gains, adding 10.5 points to 5788.9, following yesterday’s 2% surge in the wake of the European Central Bank’s move to offer unlimited funds to lower debt-ridden countries’ borrowing costs.
Wall Street’s Dow Jones Industrial Average was broadly flat after figures showed the US economy created a lower-than-expected 96,000 jobs in August.
Back in London, Xstrata saw its shares rise 6% or 60p to 1038p in the wake of Glencore’s higher bid.
Qatar, a key investor, previously said it would vote against Glencore’s proposed offer while other shareholders had also been hostile.
But Glencore cancelled a meeting to vote on its offer at the last minute and came back with a higher proposed bid, which would also see Ivan Glasenberg remain as chief executive, whereas he had previously planned to let Xstrata’s Mick Davis take the helm.
Glencore shares were down 21.3p at 371.1p and were still trading despite its request for them to be suspended.
Meanwhile, sentiment was also boosted after official figures revealed the strongest monthly rise in manufacturing output for 10 years.
Manufacturing output grew by 3.2% in July, the Office for National Statistics (ONS) said, while the wider index of production grew by 2.9%.
Other miners, as well as bankers, continued to take heart from ECB boss Mario Draghi’s plans to buy bonds to take the pressure off struggling nations such as Spain and Italy, giving them more breathing space to repair their finances.
Evraz was top of the London market, adding 13% or 28.8p to 255.5p, while Lloyds Banking Group was ahead 0.7p at 36.9p, Royal Bank of Scotland advanced 8.8p to 242.3p and Barclays jumped 10.9p to 204.2p.
Staffing business SThree saw its shares rise 7% after it reported a rise in third quarter gross profits amid strong demand for sectors such as energy & resources and pharmaceuticals & biotechnology. Shares were up 18p at 290p.
And supermarket chain Morrisons surrendered some of yesterday’s gains when investors had been impressed with plans to cut back on new store space and launch a new online wine venture.
Shares fell 1.7p to 291p.
