Ever since Glencore floated last year, its 34 per cent stake in Xstrata has loomed large, and this week it revealed details of plans to merge the two businesses into a commodities powerhouse. But what the respective management teams were hoping would be a wave of acceptances may not turn out to be the formality they expected.
Fund managers at Schroders and Standard Life have already declared their opposition, highlighting the fact that a 'merger of equals' that will end up with Xstrata shareholders owning 45 per cent of the combined entity, isn't very equal. "This is a fabulous deal for Glencore, it's probably a great deal for the Xstrata management, but it's a poor deal for Xstrata's majority shareholders," Schroders' Richard Buxton told Reuters. These two investors account for less than 4 per cent of Xstrata in aggregate, but their vocal opposition might be mirrored among other, more publicity-shy, investors.