Shareholders do their best to find the right price and estimate fair values in corporate transactions, and then factor in premiums for relinquishing control. In the proposed tie-up of miner-trader Glencore with Xstrata, a pure miner, investor pressure forced Glencore to improve the terms. Elsewhere, investors have reduced the total market capitalisation of EADS and BAE after the aerospace companies said they were considering a merger.
Shareholders' perspective, perhaps inevitably, is primarily financial. So they focus on the hard numbers: synergies, earnings and the cost of capital. Even if they take a broad view of finances - and do not fall into the trap of underestimating the dangers of excessive debt - they struggle to evaluate corporate culture and regulatory politics, which usually decide whether or not any deal ultimately succeeds. No price is right if a tie-up is basically wrong - overleveraged, undermanaged or self-destructive.
The current tendency of shareholders to behave more like speculators than businessmen worsens the problem. In the long term deals only work out well for shareholders if they work out well for other stakeholders. But both the long term and stakeholder analysis are almost irrelevant to the large, perhaps overwhelming, constituency of investors trained to think mostly about what other people are likely to think about a company or a price.
The most important question about the proposed Glencore-Xstrata combination is whether Glencore's trading culture will meld well with Xstrata's large portfolio of long-lived mining assets. Ivan Glasenberg, Glencore's chief executive, is now set to run the whole enterprise. Unfortunately, shareholders on both sides seem far more interested in the exchange ratio than in the fundamental wisdom of the merger proposal.
The non-government shareholders of EADS and BAE may also put finance first. But in this deal there are stakeholders who can block the tie-up and who will be asking the key question: does it make sense to merge a British defence company with extensive US interests into a Euro zone aerospace company with a civilian bias? The many governments involved in this transaction can tear up a deal which outside shareholders find attractive. Some of Xstrata's stakeholders must wish they had that power.