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Qatar Holding set to oppose Glencore-Xstrata tie-up plan

Keywords: Tags  Xstrata, Glencore International, Qatar Holding, merger plan, Claire Hack

LONDON — Qatar Holding LLC plans to vote against the merger of Xstrata Plc and Glencore International Plc in a meeting of shareholders to be held Sept. 7, the company said.

The Qatari sovereign wealth fund, which now holds an 11.67-percent stake in Zug, Switzerland-based Xstrata, said it won’t support the merger at the current ratio of 2.8 Glencore shares for every Xstrata share.

While Qatar Holding "continues to support the principle of a combination of Glencore with Xstrata, it has determined that it will not support the proposed merger terms," the Doha-based fund said.

As such, the company "will vote its entire shareholding in Xstrata against the proposed scheme and merger terms at the scheme meeting and extraordinary general meeting of Xstrata," it said.

Qatar Holding "believes that Xstrata has a strong future, whether in combination with Glencore on acceptable terms or as a standalone entity, and that its shares represent an attractive long-term investment," the fund said.

The widespread market consensus has been that Baar, Switzerland-based Glencore wouldn’t be able to secure the merger without pushing up the proposed share ratio.

Qatar Holding called for a ratio of 3.25 Glencore shares for every Xstrata share at the end of June, immediately prompting doubts about the success of the merger.

Now that the company has officially said that it will vote against the transaction, the deal is believed to be dead in the water.

Several other shareholders, including Schroders Plc, Standard Life Plc and Vinke Asset Management LLC, have said they see the offer as too low and have also pledged to vote against the merger. That means it might be impossible for Glencore to reach the required 75 percent in favor.

Glencore chief executive officer Ivan Glasenberg was adamant during a presentation of the company’s first-half results on Aug. 21 that 2.8 shares was a fair offer and that there were no plans to increase that offer.

Glencore declined to comment.

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