Giant mines merger set to fall through

Advisers to lose millions as Xstrata shareholders prepare to vote down £53bn deal with Glencore

Investment bankers working on the troubled Glencore-Xstrata £53bn megamerger will lose almost £70m in fees if, as expected, the deal collapses this week.

Big name banks working on both sides of the merger, including Citi, Morgan Stanley, JP Morgan and Goldman Sachs, were expecting to share a success fee pot of up to £82m when the deal was finalised. However, it is thought they will receive around 10 per cent of that, after shareholder Qatar Holding, which has recently built a 12 per cent stake in Xstrata, confirmed plans last week to effectively torpedo the deal.

The Middle Eastern investment vehicle wants Glencore to improve the terms from 2.8 to 3.25 of the commodity giant's shares for every one of Xstrata's. Glencore's boss Ivan Glasenberg is unwilling to accept this, but the Qataris and another big shareholder, Norges Bank Investment Management, own big enough stakes to vote the offer down at a shareholder meeting this Friday.

Mr Glasenberg has been determined to push through the merger for years, a move that would have reunited the pair after Xstrata was spun-off a decade ago. Glencore still has a 34 per cent stake in the miner.

Xstrata's board has endorsed the move, with the Swiss-based company's chief Mick Davis and chairman Sir John Bond lined up to remain in the merged entity. Mr Glasenberg would have taken the deputy chief exec and president roles.

On Friday, the activist fund – and top 20 Xstrata institutional shareholder – Knight Vinke, called for a shake-up of its boardroom should the merger collapse. The investor said: "Should the transaction fail to be approved, we intend to consult other shareholders regarding the composition of the Xstrata board so as to make it more independent and robust."

A source close to the company suggested several ageing board members, notably sexagenarian non-executive directors David Rough and Sir Steve Robson, will departure in the next 12 months. Last year, PIRC, a corporate governance body that advises funds that own £1.5trn of assets, said shareholders should vote against their re-election as they had served for nearly a decade and could no longer be considered independent.

As well as the banks, lawyers, accountants and public relations firms were due to receive millions when the deal went through, but their fees will be less significantly reduced.

Reports this weekend suggest that Sir John Bond might be under pressure. Some shareholders believe he was willing to sell too cheaply.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence