Investor threat to Glencore link-up

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A £42BN tie-up that would create the world’s fourth largest natural resources firm was in danger of collapse yesterday after a major investor demanded improved terms.

Mining giants Glencore and Xstrata want to form a company worth $65bn (£42bn) but must secure the backing of 75 per cent of shareholders in separate votes, as well as regulatory approval, to proceed.

But on Tuesday night Qatar Holdings, Xstrata’s second biggest shareholder, surprised Glencore by opposing the deal and demanding a higher return for its stake.

As Glencore awaits talks with Qatar, it said it has also received a proposal from Xstrata to amend a £173m pay deal drawn up for Xstrata boss Mick Davis if the deal proceeds, which has angered other investors.

Investment group Qatar Holding, which also owns Harrods department store and a significant stake in supermarket Sainsbury’s, has demanded 3.2 of Glencore’s shares in exchange for each of its Xstrata shares.

This compares to Glencore’s offer of 2.8 of its shares for each one of Xstrata’s.

A statement from Qatar, which has an 11 per cent stake in Xstrata, said its new terms “would provide a more appropriate distribution of benefits of the merger while properly recognising the intrinsic stand-alone value of Xstrata”.

Qatar, a subsidiary of the sovereign Qatar Investment Authority, was previously thought to be in favour of the deal, which has already drawn opposition from investors including Schroders, Standard Life and Fidelity.