There is a dead canary in the year’s biggest agreed-to merger.
The agreement between mining and commodities giants Glencore and Xstrata is facing increasing investor pressure, which could kill the deal and strike a devastating blow to this year’s M&A stats.
The two reached the long-anticipated $66 billion deal in early February. It is the year’s biggest deal by several multiples. The second-biggest targets deal across the globe would be Eaton Corp’s deal to acquire Cooper Industries for $12.7 billion, according to Dealogic.
But the rancor over the deal started soon afterward and is now increasing. WSJ colleague Dana Cimilluca reports today that Xstrata shareholders may vote down a lucrative pay contract for the miner’s executives. The incentives, which total $267 million, include $44.6 million for CEO Mick Davis that is not tied to any performance targets.
As Cimulluca writes, this comes as several other U.K. pay packages have led to shareholders voting no and a no vote here could scuttle the deal.
That would be a giant blow to an already weak global M&A market this year.
There have been $1.03 trillion in deals reached around the globe so far this year, the lowest level since 2009, according to Dealogic. Strip out this biggest deal and it is suddenly the lowest level since 2004, says the data provider.
- Glen-X Breakup Would Only Add To M&A Gloom (blogs.wsj.com)
- Xstrata-Glencore deal jeopardized by pay plan: WSJ (marketwatch.com)
- Stock Rally Snags on Gloom (online.wsj.com)
- Deals of the Day: Nasdaq CEO Lost Touch Amid Facebook Flotation Chaos (blogs.wsj.com)