Commodity trader Glencore’s $32 billion takeover of miner Xstrata looked set to go ahead after Qatar Holdings — the bid target’s second-largest shareholder — backed the deal.
Qatar, an unexpected kingmaker in Glencore’s bid for Xstrata, said on Thursday that it would vote in favor of two key resolutions on the takeover aimed at creating a mining and trading powerhouse. In a snub to Xstrata management, Qatar said that it will abstain from voting on a multimillion-pound management retention plan, which increases the chances of that aspect of the deal being voted down. “In a nutshell, this means the deal is all but done," Liberum analysts said.
Qatar's support for the deal, first announced in February, comes after its surprise opposition to terms in June and brings Glencore within weeks of sealing its long-running pursuit of the Swiss mining company. Under a complex structure of votes, Xstrata investors will be able to express their views on the management retention plan without endangering the merger.
Xstrata has argued that retention is necessary to the success of the merger as it will ensure that key managers stay on to oversee the shift into a phase of significant volume growth at its mining projects.
“If the management incentive arrangements do not get passed, it raises some question marks about the success of the deal,” Macquarie analyst Jeff Largey said.