Xstrata Recommends Glencore Mega-Merger

Xstrata's board has agreed the terms of a mega-merger with commodities trader Glencore, and recommended it to shareholders.

The multi-billion pound merger - proposed in February - had turned into a long-running saga amid shareholder discontent over the terms.

One of the most contentious issues was been a £227m retention package for top managers, with several large shareholders threatening to block the tie-up unless the bonus scheme is toned down.

But miner Xstrata agreed to give shareholders a separate vote on the bonuses - allowing the deal to go ahead despite potential anger over pay proposals.

It believes the incentive deals are essential in order to retain key Xstrata managers for running the combined group's mining operations.

In a further development, Xstrata's current chief executive, Mick Davis, would be replaced by another company executive - retaining a majority of directors on the combined board

Glencore was forced to improve its bid after Xstrata's second largest shareholder - Middle East sovereign wealth fund Qatar Holdings - said it would block the merger because the offer was too low.

Former Prime Minister Tony Blair was called to help broker the revised $36bn (£22.5bn) bid.

If the deal goes ahead, it would create the world's fourth-biggest natural resources firm - worth around $90bn (£56bn).

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