Breaking: Qataris turn against Glencore-Xstrata

The $65bn merger between commodities trader Glencore and miner Xstrata was hanging in the balance on Tuesday night with people close to the deal voicing doubts it could win approval from shareholders unless key terms of the deal are changed


 http://www.ft.com/cms/s/0/fec6352e-bfb1-11e1-bb88-00144feabdc0.html#ixzz1yvmICNW2

REF : FT.com

"The unexpected announcement by Qatar Holding, which has a near 11 per cent stake in Xstrata, means that more than 25 per cent of shareholders are against the deal’s current terms

Qatar said that it saw merit in a combination of the two companies, but was “seeking improved merger terms”. Glencore is offering 2.8 of its shares for each of the miner’s but Qatar said an exchange ratio of 3.25 per share “would provide a more appropriate distribution of benefits of the merger”.

The Qatari move came after people close to the deal voiced doubts that it would win approval from shareholders unless key terms were changed.

Xtrata is considering bowing to investor pressure over multimillion-pound windfalls proposed for its senior executives, in a late effort to save the merger, according to people familiar with the discussions. Mick Davis, Xstrata’s chief executive, and his counterpart at Glencore, Ivan Glasenberg, met in London on Monday and discussed the shareholder revolt against the merger.

With just over two weeks until Xstrata shareholders are set to vote on the deal, both companies now concede that it is unlikely that the deal will go through in its current form. “The deal is not looking positive,” said one person close to the merger talks.

Sir John Bond, Xstrata’s chairman, and David Rough, senior independent director, have started to draft alternative packages for Xstrata executives “in line with shareholder feedback”, according to the person familiar with the deal. Xstrata could seek to reopen discussions over the merger ratio, which Glencore is likely to resist.

Shareholders have expressed anger at the proposed retention payments for Xstrata’s senior management, including £29m over three years to Mr Davis, which do not include performance targets. As part of the merger, Xstrata non-executive directors had insisted on retention packages, which totalled £173m for 73 senior employees, believing it crucial to keep the miner’s core team in place.

Investors warned they wanted significant changes to the package, rather than tweaks. “A lot of investors are very unhappy. The companies will have to make some far-reaching changes before they win over investors,” said a top-20 shareholder.

The proposed payouts ignited a fresh round of shareholder activism weeks after investor rebellions forced out a number of UK business leaders, including the heads of insurer Aviva and publishing group Trinity Mirror."

By Javier Blas and Helen Thomas in London and Camilla Hall in Abu Dhabi