A few questions about the Glencore-Xstrada deal

That's not Marc Rich hiding behind the curtain, is it?

There can be few public companies that have as extensive a track record in the art of the shady deal as Glencore.

Bribery and corruption were a way of life. Every boycott or sanction or embargo was seen as a business opportunity.

Pay off a dictator to get lucrative mining concessions? How much?

Sell Iranian oil to Israel? No problem!

Mind you, most of the dirty business happened before they went public. The added scrutiny of being a public company seems to be slowing them down somewhat. Since their IPO in early 2011 their share price has lost about a quarter of its value. Not only that, but their corporate debt is at serious risk of a ratings downgrade.

So it's obvious why they want Xstrata. Forget about efficiencies of scale and corporate synergies. It's about getting their hands on billions of dollars in annual operating profit.

The media are starting to talk about this as a "hostile" takeover, and I'm not sure such a conclusion is warranted. Both companies are run by Marc Rich proteges. Xstrata is too big and too public a company to be run according to the "we'll do whatever we can get away with" ethos that has prevailed at Glencore.

The global climate for mining conglomerates is what's getting hostile, not this takeover. Governments in many parts of the world are not nearly as easy to bribe and bully into acquiescence as they were even twenty years ago. That's a trend that will gain momentum going forward. It's a trend that will make new operations far more expensive to bring on stream.

That makes established operations that much more valuable, and I don't think that value comes close to being reflected in the share swap on offer. Glencore is already the largest Xstrata shareholder. Once they have control they'll be able to do what they want with that cash flow.

That's bound to be good news for Glencore insiders, but not necessarily for the other shareholders.