On Wednesday, the Xstrata board, chaired by Sir John Bond, is likely to approve the Glencore – Xstrata £36 billion merger with the revised terms, which values one Xstrata share at 3.05 Glencore shares.
Xstrata held a meeting on Friday with independent, non-executive directors to discuss shareholder sentiment. Glencore’s chief, Ivan Glasenberg, at the meeting, reassured Xstrata senior managers that they would be allowed to man the mining assets of the group if the deal became successful.
Meanwhile, the position of Qatar Holding, which owns a 12% stake in the miner and is the second biggest shareholder of Xstrata, remains unclear. Qatar had previously indicated it was holding out for 3.2 Glencore shares for each Xstrata share.
Other investors also made their stand clear with Knight Vinke, which owns 0.5% of Xstrata’s shares, clearly declining to extend its support for the deal. However, Standard Life, Xstrata’s tenth largest shareholder, declared its support for the deal and said that it would oust the board if it does not agree to the latest offer from Glencore.
Mick Davis, Xstrata’s chief executive, was to run the combined group under the original deal. But under the revised terms, Glasenberg will take control, with Davis’ exit after six months. Davis is likely to receive a final payment of at least £8 million and could cash in company shares worth up to £30 million if Glasenberg’s bid is successful.
Davis’ payout is significantly lower than the controversial retention agreements agreed by the Xstrata board for Davis and other company executives when the two groups were considering a “merger of equals”, which received severe criticism from other shareholders.