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Mon 3 Sep 2012 10:56 AM

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Glencore says won't budge on Xstrata terms

Qatar Holding said last week it would vote down mega merger if bid not improved

Glencore says won't budge on Xstrata terms

Glencore will stick to the terms of its US$33bn bid for Xstrata resisting mounting pressure to sweeten the deal before investors vote on September 7, Bloomberg reported citing sources with knowledge of the deal.

No talks have taken place between Qatar Holding, which owns 12 percent of Xstrata, and Glencore and none are scheduled to take place before the vote, the person said.

Opposition to the proposed merger intensified last week after Qatar Holding said it was “determined” to vote down commodities giant Glencore's offer for Xstrata based on its current offer of 2.8 new Glencore shares for every existing Xstrata share.

The Doha-based investment fund said that while it “continues to support the principle” of the merger, based on its current terms it would “vote its entire shareholding in Xstrata" against the deal come the Scheme Meeting and Extraordinary General Meeting of Xstrata on Friday.

Shareholder advisory firm ISS last week recommended shareholders vote against the takeover after criticising the terms as well as the retention packages offered to senior executives to keep management after the deal.

ISS said proposed packages comes in the wake of a “history of poor pay practices that have taxed shareholder patience” but accepted that the two companies would gain some “marginal strategic upside”.

The criticism followed a day after Glencore chief executive Ivan Glasenberg said he would not overpay for the company, giving the strongest sign yet that he will not cave into Qatar’s demands to increase his offer for Xstrata.

The move has put increasing pressure on Glencore to raise the bid or walk away because the merger needs approval from 75 percent of Xstrata’s shareholders, excluding Glencore. If investors representing more than 16.5 percent of Xstrata’s total shareholding oppose, it would be enough to derail it the deal.

Separately, the UK's The Telegraph reported Qatar Holding may increase its stake in Xstrata to 25 percent if the miner’s planned merged with Glencore collapses.

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