Wednesday Papers: Glencore-Xstrata merger threatened

Top stories

• Financial Times: Several large investors have threatened to block Glencore and Xstrata’s proposed all-share merger, which would create a $90 billion commodities giant in the largest global mining deal on record.
• The Guardian: Greece's prime minister was on the brink of a deal Tuesday night to avoid a chaotic default by the debt-choked country, with officials saying an agreement would "almost certainly" be clinched when talks resumed on Wednesday; the Athens stock exchange rallied on the news with bank stocks rising 6.5%.
• The Independent: British Chancellor George Osborne called Tuesday night for an end to the political furore over bonuses and pay in England, warning that it threatened to create an "anti-business culture" that could cost jobs.
• Financial Times: For the whole of 2011 ArcelorMittal – which derives roughly 40% of its output from plants in Europe, where demand has been tepid – recorded a 22.4% fall in net profit to $2.3 billion, after $2.9 billion in 2010.
• Daily Mail: Tens of thousands of families seduced by government-backed property schemes in the UK are trapped in homes they have outgrown, but can’t sell nor afford to buy outright.

Business and economics

• Financial Times: Glencore has agreed to pay Xstrata a £298 million fee if the Swiss commodities trading house changes its recommendation and the merger deal fails.
• Financial Times: Antitrust authorities posed no “hurdle” to the $90 billion megamerger to unite Xstrata and Glencore, Mick Davis, chief executive of Xstrata said, but admitted the approval process would nevertheless be “a long affair”.
• The Daily Telegraph: Xstrata chief Mick Davis has been put on notice to waive his £11 million bonus for the completion of Xstrata’s $86 billion merger with Glencore.
• The Independent: Mark Zuckerberg's tight control over Facebook is under assault from shareholders even before his social networking giant joins the public market.
• The Daily Telegraph: BHP Billiton has reported a 5.5% slide to $9.94 billion in attributable half-year profits.
• Financial Times: UBS’s net profits fell by a larger than expected 76% in the fourth quarter to SFr393 million ($426 million) from SFr1.66 billion in the same period in 2010.
• The Daily Telegraph: RBS Chief Executive Stephen Hester disclosed that his radical overhaul of Royal Bank of Scotland has so far cost £38 billion.
• Financial Times: Crude oil from Canada was sold for $62.42 a barrel, half the international prices, as increasing output from the world’s sixth biggest producer threatens to overwhelm regional pipelines and refineries.
• The Independent: Wholesale gas prices touched a six-year high of £1 a therm Tuesday as the big freeze showed no sign of letting up in Britain and across Europe.
• The Daily Telegraph: Yahoo! chairman Roy Bostock and three other directors are to step down in a boardroom clear-out as the embattled US internet company attempts to win back investor support.
• Financial Times: GlaxoSmithKline is emptying out tens of millions of euros each day from its bank accounts in Europe’s more fragile countries in order to minimise the risk of exposure to a regional banking or financial crisis.
• The Daily Telegraph: BP has raised its dividend for the first time in a year to 8 cents per share.
• The Independent: The Indonesian shareholders of the London-listed Bumi are confident they can shake up the miner's board and remove co-chairman Nat Rothschild before creating the world's biggest coal firm.
• The Guardian: National Australia Bank, the Australian owner of Clydesdale and Yorkshire banks, is reviewing the future of its UK business as a result of the "recent reversal" in the UK economy – raising fears for up to 8,500 jobs.
• Financial Times: Shares in LVMH lost 3.5% after shareholders Paolo Bulgari, Nicola Bulgari and Francesco Trapani sold a €558 million stake in the world’s largest maker of luxury goods.
• Financial Times: Lagardère, the Paris-based media conglomerate, faces a €900 million writedown related in part to its struggling sports marketing business.
• Financial Times: CIMB of Malaysia and China International Capital Corporation are the two remaining bidders for Royal Bank of Scotland’s Asian equities, mergers and acquisitions and research businesses; the units are expected to fetch a nominal of $50 million.
• Financial Times: Coke said its fourth-quarter profits fell 71% from the prior year to $1.65 billion, while operating revenues rose 5% to $11 billion.
• Financial Times: 888 Holdings, the online gambling company, has reported record full-year revenues of $331 million, boosted by increasing numbers of internet poker players.
• Financial Times: Excluding the income from its stake in Xstrata, Glencore’s earnings before interest and tax fell 1.6% from 2010, according to the estimate released on Tuesday.
• Financial Times: US asset manager EIG Global Energy Partners is to delist its investment vehicle from Goldman Sachs’s US electronic platform and list in Hong Kong.
• Financial Times: Four Seasons, the UK’s largest care-home operator, will seek to raise up to £230 million in new equity from existing shareholders and private equity groups, as it tries to refinance £780 million in debt before a September deadline.
• The Guardian: Tui Travel has been taking UK business from its debt-laden arch-rival Thomas Cook during the busy New Year booking season, as it sold more than a third of its 2012 summer holidays, despite putting prices up by 8%.
• Financial Times: Sprint Nextel, the third-largest US mobile network operator, has announced a roaming agreement with France Telecom’s Orange Business Services that will enable Sprint to offer its multinational corporate customers global machine-to-machine data services.
• Financial Times: South Korea’s National Pension Service, the world’s fourth-biggest pension fund, is funding half of GS Engineering & Construction’s $300 million purchase of Inima.
• Financial Times: Bearish traders are adding to bets against social networking companies, despite a surge in share prices of groups like LinkedIn and Renren after Facebook’s announcement of flotation plans last week.

Share tips, comment and bids

• Financial Times: The US diagnostics company Illumina has rejected Roche’s $5.7 billion hostile takeover bid, calling the offer “grossly inadequate”.
• Financial Times: Misys and Temenos have reached agreement on the key terms of a proposed £2 billion merger that would create the world’s largest supplier of risk-management computer software to banks.
• Financial Times: Goldman Sachs Asset Management, a unit of the Wall Street bank, has agreed to buy Dwight Asset Management for an undisclosed sum, as Goldman Sachs beefs up its asset management business as part of a strategy to tap into the retirement savings of a wave of ageing baby boomers.
• The Guardian (Comment): Banks are the biggest scroungers of public money – solutions will not simply materialise if we don't keep up the pressure.
• The Daily Telegraph (Comment): In a classic liquidity trap, supply side reform such as cutting business taxation is ineffective. Alternative investment incentives have to be found. Taxing the surplus may be one of them.
• Daily Mail (Comment – Alex Brummer): If Ivan Glasenberg and Mick Davis thought the merger was going to be a done deal because of Glencore’s 34.4% holding in Xstrata they were a little out of touch.
• Financial Times (The Lex Column): Coca-Cola: Coke shares may be unlikely to make anyone rich from here but they are even more unlikely to make anyone poor. Shell out and drink up.
• Financial Times (The Lex Column): Sohu: it’s revenues gained 42 per cent last year, considerably higher than Google’s at 29 per cent. Twists in the tale apart, It looks good value.
• Financial Times (The Lex Column): GlaxoSmithKline: GSX is in decent shape. But as it further expands abroad, investors should watch not only the underlying numbers, but the headline ones too.
• Financial Times (The Lex Column): UBS: dwindling customer activity – blamed heavily on confidence-sapping eurozone uncertainty – pushed the gross margin on invested assets lower.