Xstrata and Glencore tumble as Qataris strengthen stranglehold

The long-running saga of the world’s largest merger took another twist today when Qatar Holding continued to snap up shares in Xstrata.

This leaves the $30 billion (£19.1 billion) bid by Glencore for the mining giant looking more unlikely.

Xstrata was the biggest faller this morning, down 3.5% to 906.1p and Glencore, which already owns 34% in Xstrata, was down 0.64% to 349.8p.

The Qatari state investment fund has been stealthily buying more shares over the past two weeks, with the latest disclosure today, taking its stake to more than 11.7%. Glencore’s bid values each Xstrata share at 2.8 Glencore shares but the Qatari’s are demanding 3.25. Both share prices have taken a battering, falling around 29% since highs in February — meaning the share ratio has remained the same. Glencore chief executive Ivan Glasenberg has remained resolute on the bid price, arguing falling commodity prices have taken their toll.

Glencore updates the market with first-half results tomorrow. Qatar joins shareholders including Standard Life and Legal & General, who are against the mega-merger. The deal needs 75% approval at the September 7 vote.

Mike van Dulken, head of research at Accendo Markets, said: “There are expectations the proposed merger ratio of 2.8 Glencore shares could be improved to 3. But Glasenberg may even resist calls to boost the offer at all.”

Eurasian Natural Resources Corporation, fell 2.49% to 360.5p as Credit Suisse reduced it to neutral from outperform with a target price of 450p.

In France the shock news of the weekend was the sudden death of Pernod Ricard chairman Patrick Ricard. Ricard, 67, stepped down from his chief executive position at the drinks business in 2008. Ricard, who died suddenly on Friday, was the son of the founder and is credited with taking the firm global so it is now only second to Diageo. Shares in Diageo rose 0.56% to 1695.75p today with thirsty City traders expecting it to confirm its purchase of the Jose Cuervo tequila business in a $3 billion (£1.9 billion) cash and shares deal within the next month.

The FTSE 100 was up 2.42 points this morning at 5854.84 and UK bank shares were top of the leader board with Lloyds Banking Group up 0.9p to 35.1p, Barclays up 3.3p to 196.3p and Royal Bank of Scotland up 2.5p to 234.2p.

Over on Plus, Arsenal Football Club confirmed the sale of Cameroon midfielder Alex Song for £15 million to Futbol Club Barcelona — the latest player out the door after the £24 million sale of Robin van Persie. With its two best players taking a walk there was at least relief the share price was not hit. Shares were unmoved at £16,805.