Mining giants locked in final talks on terms of deal

Xstrata and Glencore were scrambling to sort out their differences yesterday ahead of Monday's deadline to agree the final terms of an $80bn (£50bn) mining and commodity trading mega-merger between the two.

Xstrata is thought to be concerned about the composition of the board of the combined entity and is seeking assurances that one of its executives will take Mick Davis's position on it when he leaves six months after the merger.

The boardroom issue forms part of broader discussions about Glencore's revised offer for Xstrata earlier this month, which it made after key shareholders such as Qatar indicated that its initial offer was too low.

Glencore's latest offer would give Xstrata 3.05 of its shares for each of theirs – up from an initial ratio of 2.8. However, a condition of the revised offer stipulated that Glencore's chief executive, Ivan Glasenberg, would run the enlarged group instead of Xstrata's boss, Mick Davis, who had previously been lined up.

Xstrata has been given until 7am on Monday morning to accept or reject Glencore's sweetened bid.

Under Glencore's revised proposal, Mr Davis would run the company for six months after the merger before handing over to Mr Glasenberg and leaving the company. Xstrata is understood to be seeking assurances that Mr Davis's seat on the board will be handed to another Xstrata employee following his departure to ensure the company has six people on the board to Glencore's five.

Xstrata and Glencore are also trying to resolve the matter of retention payments, which have proved controversial among some shareholders. They are thought to be discussing whether to hand about £140m in retention bonuses to about 70 key Xstrata staff and whether to make them contingent on the deal going through. Under Glencore's revised proposals, Mr Davis's previously promised £29m package would no longer be part of the scheme.

Xstrata was originally given until last Monday – 24 September – to make a decision on the bid, but was granted an extension. If Glencore and Xstrata can agree a deal, a successful outcome is by no means assured because many shareholders appear to be opposed to the deal.