New support for Glencore-Xstrata deal

ISS, which advises institutional investors in the US and the UK, has changed its position and is now in favour of a tie-up between Swiss neighbours Xstrata plc (LON:XTA) and Glencore International (LON:GLEN).

Shareholders will vote on the deal – initially billed as a 'merger of equals' in February, but now more resembling an unfriendly takeover – between the two commodities giants on November 20.

In September Glencore CEO and largest shareholder with more than 15%, Ivan Glasenberg, relented under pressure from large Xstrata shareholders like Qatar's sovereign wealth fund and upped the offer to 3.05 (from 2.8 shares before).

FT.com reports ISS's latest advice is that "given the reasonable premium, some strategic and corporate governance upside, and simplification of shareholder structure, we recommend that shareholders vote for the proposed transaction,” adding that "the 22.1 per cent premium as measured in the September announcement appears as reasonable given the particular circumstances.”

The proxy advisory service says Glencore which owns 34% of Xstrata already "effectively control" the miner and its options for another partner is limited, but it still opposes the more than generous $200 million set aside for 'retention bonuses' for Xstrata's top management.

The $200 million figure is actually $75 million less than what was called for in the original deal because as part of the revised offer, Glasenberg would take up the reins of the combined company and not current Xstrata CEO Mick Davis, who was earlier slated to lead a post-merger 'Glenstrata'.

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