Xstrata & Glencore, Facebook's IPO, top quality international companies, and The Trader
The market's worst kept secret is out - Glencore is in talks with Xstrata about a merger of equals to create an $80bn (£51bn) resource company. Details are still thin - the statement was forced out because of a leak - but the outcome looks rather disappointing for Xstrata shareholders. Xstrata needs to offer its shareholders a much better deal than that. Xstrata and Glencore aren't the only global giants to hit the headlines today. Facebook too had an announcement to make: it's filed papers for an initial $5bn listing in the US, making it the world's biggest technology IPO yet. If you're not one of Facebook's 800 million users and have no idea how social media companies should be valued, Malar Velaigam casts her eye over the sector and advises on the best way to assess this new breed of company. Facebook's debut on the market has been carefully planned and it comes market-ready with a worldwide "customer" base and a profit in 2011 of $1bn from $3.7bn of largely ad revenue. That healthy profit margin already places it in stark contrast to the flop that Ocado's debut and subsequent story's been, and underlines the attractions generally of global giants. Their fortunes aren't tied to a single economy, at risk of spluttering along in first gear. According to the Institute for Fiscal Studies the UK is heading straight into a technical recession and growth going forward will be even slower than forecast. And although the Institute argues that the chancellor is taking the right steps to tackle the deficit (if he had followed Labour's plans, the think tank says, the deficit in a few years would be around £76bn rather than the £24bn now expected), it warns that, should the eurozone break up, UK public finances would take another big hit. Against that sort of backdrop, the allure of big international companies can only grow. For peace of mind and the potential for strong returns, it makes sense to tuck at least a few of these chaps into your portfolio. Algy Hall's done the research and come up with a list of global elite recommendations. Meanwhile the Trader explains why even though the current stock market is about as appealing as a grotty late-night takeout, he's still tucking in. Finally, the stripping of former RBS chief Fred Goodwin of his knighthood has split opinion up and down the country - and at the IC. John Hughman and Alistair Blair hold firmly opposing views. Worried chief executives and directors might like to note that Mark Zuckerberg's bonus in the first half of 2011 was a mere $220,500.