If he’s selling, I’m not buying. This was an excellent plan with last year’s public offer of Glencore shares. Dazzled by the fees and muzzled by the conflicts of interest, very few mining analysts were in a position to say what they thought. The result was a high pressure sales pitch, a willing suspension of disbelief among investors, and a 530p launch price that’s never been reached since.

So what about the converse – if he’s buying, should I be selling? Ivan Glasenberg, the architect of today’s Glencore, clearly yearns to merge. It’s not yet a year since the botched flotation, but so keen is he that he’s yielded the posts of chairman, chief executive and finance director to Xtrata as the price of agreement. This is either a demonstration of what a warm-hearted, selfless individual he really is, or a tacit admission that Glencore’s years of making killings from commodity trading are coming to an end.

There can be few people in the world who know more about this subject than he does. He understands that profits can be highly variable, and that successful trading demands a combination of nerve, timing, and ruthlessness. These are not qualities generally found in warm-hearted, selfless individuals. Glasenberg can see that Glencore needs Xstrata, a business which owns some of the world’s finest mines. He has the perfect platform to bid, in the shape of Glencore’s 34% stake in Xstrata, but the decision to put the two companies together using a tax-saving scheme of arrangement may be a strategic blunder.

In contrast to a straight takeover offer, a scheme can force a dissident minority into acceptance. But the first hurdle is much higher; 75% of voting shareholders must be in favour, and Glencore cannot vote its own shares. This arithmetic allows holders of 16.5% of Xtrata shares to block the deal. Since not all shareholders will vote, the threshold is probably less than 15%. As with the flotation, most of the best analysts are muzzled (the fees could total $100 million) but the awkward squad, in the shape of fund managers from Standard Life, Schroders and Royal London are objecting strongly. Brokers Exane reckon that 3.6 Glencore shares for every Xstrata is a fairer price than the 2.8 times agreed by the prospective chairman, chief executive and finance director of New GlenX.

It’s fine PR to label the deal as a merger of equals (or a merger of egos, as it was immediately dubbed) but there’s a world of difference between trading minerals and mining them. Even Glencore’s own mines may not match up to Xstrata’s world-class collection. A Morningstar analysis notes that many are in countries where the law is, ahem, flexible, as First Quantum found out with its mine in the Congo.

It’s easy to see a pattern in Glasenberg’s strategy. Glencore had been famously private. Then in the panic of late 2008 its CDS spread ballooned out and rose to “going bust” levels. Should a trading company’s credit lines be pulled, or even repriced against it, the effects would be catastrophic. Even if it could continue to trade, its margins would be wiped out. To a seasoned operator, this must have seemed like the edge of the abyss. A year and a half later, Glasenberg took the first step towards glasnost and long-term stability, with the issue of a curious bond, convertible into a stock in an almost unknown business.

It was an admission that the old game was over, and that flotation was inevitable. Now comes a deal which would put a solid base under the group, transforming a trading company into one of the world’s biggest miners. If Glasenberg ever wanted to realise his fortune, far better to have shares in such a business, than in one dependent on the wit and nerve of a few skilled traders.

There are shades, here, of the path trodden by Goldman Sachs, from private partnership to public bank. The journey changed Goldman utterly, as the executives disengaged from the risk while keeping the rewards. It’s hard to argue with the adage quoted in the FT: “The joke in trading circles has been that Xstrata’s name, a consultancy’s invention combining extraction and strata, actually stood for Glencore’s exit strategy.”

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