x Abu Dhabi, UAEWednesday 26 July 2017

Qatar Holding move forces delay of Glencore merger plan

Glencore has put its merger with Xstrata on hold after Qatar Holding, a major shareholder in Xstrata, said it would seek more favourable terms.

Glencore has put its merger with Xstrata on hold after Qatar Holding, a major shareholder in Xstrata, said it would seek more favourable terms.

The Qatari sovereign wealth fund said on Wednesday it wanted a higher valuation in the proposed tie-up between the two natural resources giants, both based in the Swiss canton of Zug.

Qatar Holding, which is seeking to grant itself and other Xstrata investors additional shares as part of the deal, has accumulated since February shares and options giving it control of 10.8 per cent of Xstrata's stock.

Since the announcement of the so-called "merger of equals" that month, both companies have encountered widespread shareholder opposition related to payouts worth millions of dollars for Xstrata's management.

As both companies scrambled to keep the deal intact, Glencore said it would seek to adjourn a meeting approving the merger.

"Following the announcement by Xstrata today in relation to the amendments to the management incentive arrangements, Glencore intends to seek an adjournment of its general meeting, which has been convened for 11.00am [Zug time] on 11 July 2012 to approve the merger," it said on Wednesday.

Glencore's move was intended "to align it with Xstrata's shareholder meetings and to take into account any changes required to be made to the merger documentation in connection with those amendments", the company added. It declined to state when the shareholder meeting would be rescheduled.

Institutional investors including Standard Life and Schroders have voiced opposition to the deal, saying Glencore should sweeten the terms.

Alongside Qatar Holding, Xstrata's institutional shareholders opposing the deal are expected to have enough support to exceed the 16.5 per cent threshold needed to stop the merger from going ahead.

"Three cheers for the Qataris," Richard Buxton, the head of UK equities at Schroders, told Reuters. "We've said all along that the ratio was wrong so they've either now got to improve the terms or see this deal get voted down."

ghunter@thenational.ae

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