Xstrata board backs Glencore’s £20.4bn bid with conditions

Faced with opposition from several major investors, Xstrata’s board said it had revised the voting structure to allow shareholder to support the deal but object to the retention plan for what the board sees as essential staff.

“Without the ability to retain key Xstrata managers to run the combined group’s mining operations... the independent Xstrata non-executive directors believe that the value proposition of the combined entity is at risk,” Xstrata chairman John Bond said.

“This view was reaffirmed by major shareholders, in particular in the light of the change of CEO and remains the rationale for retention arrangements. Nonetheless, some other shareholders remain opposed either to the principle of retention payments or to the originally proposed inter-conditional nature of the merger resolutions.”

Xstrata added its current chief executive, Mick Davis, would be replaced on the board after his departure by an Xstrata executive, retaining the current balance of the board.

The merger has turned into a long-running saga amid shareholder discontent over the terms.