LISA BUCKINGHAM: Glencore boss may have as much sense as money

LISA BUCKINGHAM: Glencore boss may have as much sense as money

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Any number of good-looking mergers have fallen apart because boardrooms didn’t want to give way. Most dramatically, the first attempt in 2000 to merge drug giants Glaxo Wellcome and America’s SmithKline Beecham fell victim to a spectacular personality clash between Sir Richard Sykes and Jan Leschly.

So we must listen a bit more seriously to the merger plans of Glencore – the Swiss-based commodities trading house that listed somewhat controversially last year and whose shares have floundered ever since, reflecting market nerves about the number of billionaires on the board, sub-standard governance and drift in the commodities cycle.

As part of the deal, chief executive Ivan Glasenberg is offering to allow his opposite number at mining group Xstrata – his old South African school chum Mick Davis – to become boss of the combined group.

By many standards of leadership, both men
are in the top bunch. Both are forceful characters whom it is hard to
see co-existing happily in the same boardroom, let alone with one able
to boss the other around.

The one sensible conclusion we can
draw (other than that Glasenberg plans to knife Davis in the back as
soon as he gets close enough) is that Glasenberg is convinced of the
synergies and long-term business prospects in combining the groups and
is willing to count his money rather than exert his power.

Which leaves just a couple of
questions. If the case for the merger is so compelling, why is Glencore
not paying a premium to buy the 70-odd per cent of Xstrata it doesn’t
already own? And if the deal gets under way, which could be as early as
this Tuesday by some accounts, will Sir John Bond, the Xstrata chairman
and a veteran of HSBC, be strong enough to keep the peace in the
boardroom?

At the risk of Luddism, I cannot see
Facebook as a persuasive investment. With a putative price tag of
£65 billion, it appears the only reason this business is being brought
to market is to make its employees and some early backers very rich
indeed.

Mark Zuckerberg, its young founder
whose paper wealth will total nearly $ 30 billion, has come up with not
one project he needs to raise money for: indeed Facebook, unlike many
other high-tech launches, has quite enough cash to do whatever it wants.

There are many reasons to fear this
one. Zuckerberg will retain a controlling stake – in perpetuity, it
appears – as he has given himself the right to name a successor, and his
friends have given him voting rights over their shares, so if he goes
potty no one can get rid of him.

But while he knocks around for ever,
many of the bright young things running this business might decide to
cash in their chips now they have a currency to trade.

Don’t forget, too, that there is
evidence Facebook usage has peaked in Britain and the US. Though the
business has been doubling the number of its users every year, there is a
limit. With one billion this year such expansion can continue only for
the next two or three years before the entire planet is covered.

Advertisers will, I am sure, be happy
to pay nominal sums to pry into the private habits of billions. But many
Facebook users are young and do not have the affluence of Zuckerberg,
rendering them of limited use to brands offering more than burgers or
inexpensive coffees.

Why all the hand-wringing at BAE’s
failure to land a big contract to supply Typhoon jets to India when our
own Ministry of Defence has just given notice that it no longer intends
to favour domestic manufacturers of equipment for the Armed Forces?

Procurement at the MoD is a joke, but
without launch orders, our contractors will find it hard to convince
other countries to buy their wares.

By all means stress the need for free markets – just not so crudely that it is at the expense of our national champions.

Tags: boss, BUCKINGHAM, Glencore, LISA, money, much, sense

Category: Business