Hard Assets On The Line

Glencore, the world's largest commodity trader,  is seeking to merge with Xstrata, a global leader in coal and mining, to form a post-merger company to be valued at nearly $90 billion.  Latest bid .  The proposed merger would become the biggest deal of the year, involving (literally) tons of hard assets.  When we consider the magnitude and impact of this deal, it is hard not to look askance at the other big deal of the year--Facebook.  There, hard assets were tough to quantify in the face of massive valuation estimates. No such problem here, as Glencore's reach expands to aluminum, coal, sugar, grains, and crude oil.  It could not be more brick and mortar.

I don't know what Xstrata's record is on the environment, labor, or human rights.  But as putative partners in one of the biggest mergers of the year, both Glencore and Xstrata might want to shore up their compliance on non-financial matters, which are always problematic in the commodities and extractive sectors. Glencore's IPO was the largest ever on the premium listing of the London Stock Exchange, and this deal will make it an even higher profile target for activists. Plus, the company's provenance as a spin-off from Marc Rich & Company increases its mystique quotient.  A few smart steps by CEO Ivan Glasenberg today can bring reputational, as well as financial, success for the new company going forward tomorrow.

--Adonis Hoffman is a corporate advisor, professor and attorney in Washington, DC. He is the author of Doing Good--The New Rules of Corporate Responsibility, Conscience and Character.

Ikea's $62 M Pledge for African Relief is Leadership In Deed

When Ikea announced its foundation would send $62 million to help the victims of the Kenyan famine, the world's largest furniture chain reached another milestone. Ikea's pledge is the largest private donation to go to a UN relief agency in the agency's 60-year history.  At a time when national governments and transnational corporations seem impervious to the suffering in that region, Ikea's business leadership speaks volumes through its deeds. Critics have taken on the Swedish company over labor and supplier matters. But if Ikea's commitment to salve the human condition is any indication of its character as a company, the other issues should be easily solved.