Linklaters builds Chinese wall for £900m Xstrata rights issue

Linklaters has secured Chinese walls between its dual roles on Xstrata’s multimillion pound rights issue and acquisition of Australia’s MIM Holdings.
The firm is acting for JPMorgan and Deutsche Bank, the joint sponsors, financial advisers and underwriters to mining giant Xstrata’s £900m rights issue, the proceeds of which will be used on its £1.3bn takeover of MIM.
Linklaters has erected an information barrier to allow it to also give advice to Glencore International, the Swiss-based metals trader, which holds a 40 per cent stake in Xstrata.
Head of banking John Tucker and corporate partner Charlie Jacobs are leading a team acting for JPMorgan and Deutsche Bank, while associate Vinay Samani is heading a group of lawyers for Glencore.
The deal is one in a series that Linklaters has acted on for JPMorgan in connection with Xstrata, advised by Freshfields Bruckhaus Deringer. Early last year, Xstrata switched its main listing to London and also bought the Australian and South African coal assets from Glencore International for £1.7bn. Both law firms were involved in the transactions.
Freshfields corporate partner Jeremy Pitkin, who led the deal, said: “These deals were really one as they were all interrelated. Xstrata announced its intention to do a company transforming transaction like a rights issue last October, so we’ve been working on that since then.”
Xstrata first approached MIM late last year, with news of the deal finally breaking in November.
Xstrata was advised in Australia by Mallesons Stephen Jacques, while MIM was represented by Allens Arthur Robinson.
The rights issue marks the largest UK cash call since Kingfisher raised £2bn to acquire Castorama last year. However, Xstrata is facing scepticism over its decision to go ahead with the move as the three-for-two rights issue is offering the shares at 245p, a massive discount compared with its closing price of 486.5p before the deal was announced.