The opening salvos have been fired in the battle for value over the proposed $90bn merger between commodity giants Glencore and Xstrata.
On one side are the shareholders of Glencore and the managements of both companies (who hold large stakes in their firms). The other faction is made up of unhappy institutional shareholders in Xstrata who believe they are being sold a pup.
The all-share deal values Xstrata at £39.1bn or a premium of 28% over its average price in the three months prior to the bid.
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But Xstrata shareholders argue that the figure of 1,290p per share is only a 15% premium over the share price the day before the offer was made. It's thought they are aiming for 20% or around 1,336p per share, valuing Xstrata at around £39.54bn.
Both Standard Life, which owns 1.92% of Xstrata, and Schroders, which holds a 1.46% stake, have said they will oppose the merger unless the terms of the deal are improved in their favour.
Glencore already owns 34% of Xstrata, but the merger needs the approval of 75% of non-Glencore shareholders, meaning only around 16% of shareholders need oppose the deal to block it completely.
What is telling is that Standard Life's head of equities, David Cumming, admits "we see some merit in the merger".
In other words, these concerns over value are the beginnings of negotiation. When $90bn is on the table, would you expect anything less?
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