The proposed £56bn merger between Glencore and Xstrata was in effect sealed yesterday, but with a twist, as the key shareholder Qatar blessed it but failed to back a £140m package of retention bonuses.
The sovereign wealth fund, whose 12 per cent stake in Xstrata gives it huge power over the outcome of the deal, cast further doubt on whether 70 key Xstrata staff would be eligible to pocket lucrative bonuses for staying on if the merger goes through.
Xstrata voters are due to vote on the deal on Tuesday in a complex ballot that will in effect allow them to choose whether to approve the merger, with or without the bonuses.
Glencore, which owns 34 per cent of Xstrata, will not be able to vote, giving Qatar significant influence in whether the deal goes ahead and on what terms. It said it would back the deal but abstain from the vote on retention bonuses.
"In a nutshell, this [Qatar's backing for the merger] means the deal is all but done," said Ash Lazenby, an analyst at Liberum Capital.
Qatar's abstention comes after other shareholders, such as Standard Life Investments and Fidelity, criticised the payments as being unnecessary and greedy. Xstrata has consistently argued that the retention payments are key to the long-term success of the deal, to ensure that pivotal staff remain.
* Xstrata, which owns a 25 per cent stake in Lonmin, said it would support an $800m (£500m) rights issue that is crucial to the South African platinum miner's future.