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LONDON (Reuters) - The Glencore -Xstrata merger represents a $200 million-dollar pay-day forbankers and other advisers at a time when blockbuster deals are fewand far between. None, though, have played a more striking rolethan former Citigroup grandee turned independent go-between MichaelKlein. It was Klein's ability to get the two principals, Glencore chiefexecutive Ivan Glasenberg and Xstrata's Mick Davis, to agree on a valuation which helped clinch the deal,said several bankers who advised on the mammoth mining and tradingmarriage. "Both Ivan and Mick are very strong characters. To get them toagree on terms this time is an achievement. We think Klein deservesevery penny," said one banker involved, adding that Klein'spersonal fee on completion could be $15-$20 million. Weighing in last year, he earned the confidence of both men andhelped them overcome the rivalries between two of the business'stoughest dealmakers that had got in the way of previous efforts tomerge the companies. Commodities trader Glencore has had a 34 percent stake in Xstratathat dates back to the miner's early days as a Swiss infrastructurecompany. Financial advisers working on the deal are set to share a total feepot of $130 million, with a further $70 million slated for legal,accounting, public relations and other counsel, according to mergerdocuments released on Thursday. Bankers have long said that a full marriage between the two firmswas inevitable. But Glencore, opaque to outsiders before its$11-billion initial public offering a year ago, had to build up atrack record with analysts and a clear market valuation beforeDavis at Xstrata would revive merger negotiations in earnest, afteryears of on-again-off-again discussions. The talks became serious when Klein got involved around the thirdquarter of last year, people familiar with the matter said. According to a second banker, Klein's pivotal role was as an honestbroker between the camps. HONEST BROKER Glasenberg and Davis already had strong ideas about how a dealshould work and had prepared much of the ground themselves, thebanker said. But what Klein brought in was his ability to play thedetached observer, able to filter down to the essence each man'sideas and present them to the other. "He was chosen for this role because he does not know Mick or Ivanwell enough for the other side to cry 'bias'," the second bankersaid. The banker said that Klein was especially helpful explaining themerits of Glencore's ideas to the Xstrata board. On occasion, Kleinwould also tell Glencore if it was pushing the envelope too far,the banker said, declining to elaborate on specific circumstances. "I think Glencore will pay him a decent fee," the banker said."They have a reputation for not paying very much for M&Aadvice, largely because they cook their own deals. "But they will pay Klein, because he delivered value." Klein, described by someone who knows him as either loved or hatedby clients and at times "hyper-active", was a 23-year Citigroupveteran, who arranged Abu Dhabi Investment Authority's $7.5-billioncapital injection in the firm in 2007. He left the following year when he missed out on the top job ofrunning the bank's combined investment bank and asset managementbusiness - the institutional clients group. A few months after his departure, Klein was instrumental inBarclay's acquisition of Lehman Brothers, for which he earned a feeestimated by bankers involved at some $10 million. BIG NAMES Klein's slice of the fees in the Glencore-Xstrata deal will meanless compensation for the well-known individuals and the bankingteams advising the two groups. Citigroup, Morgan Stanley, Credit Suisse and BNP Paribas haveworked for Glencore and Deutsche Bank, JP Morgan, Goldman Sachs,Nomura and Barclays for Xstrata. According to banking sources, Credit Suisse, BNP Paribas andBarclays will receive less than the other banks because they werebrought into the deal at a much later stage. These banks were not credited as advisers when documents for thedeal came out in February, but they will have been eager for a rolebecause the combined company is expected to continue Glencore'sopportunistic and lucrative acquisition strategy; even whileworking through the Xstrata deal, Glencore snapped up Canada'slargest grain handler, Viterra, in a $6-billion, three-wayacquisition. Xstrata's decision to grant Barclays a mandate is said by bankersfamiliar with the deal to have come after a last-minuteintervention from the bank's chief executive, Bob Diamond. London's "mining king" Ian Hannam, the veteran rainmaker whoresigned from JP Morgan last month to fight a 450,000-pound fineimposed by British regulators for passing on inside information,was also still involved in the transaction. Davis has come to the defence of the former special forces soldier,who helped Xstrata to market a decade ago. Teams at Citigroup and Morgan Stanley, including veteran advisersDavid Wormsley and Simon Robey, will get less than Xstrata's mainadvisers, bankers said, due to Glencore's traditionally moreaggressive stance toward its bankers. "Xstrata, a public company, has long-standing and deeperrelationships with its advisers, so it has wanted to reward themappropriately," another banker said. Thomson Reuters 2012 All rights reserved SUBSCRIBE to Mineweb.com's free daily newsletter now. The e-commerce company in China offers quality products such as Mezzanine Floor System , Cantilever Racking, and more. For more , please visit Industrial Pallet Racking today!
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