One of Britain’s leading shareholder advisory groups yesterday urged Xstrata investors to reject a $33bn takeover plan by commodities trader Glencore.
Advisory body Pirc said it was concerned over the level of due diligence carried out on Glencore given the complexity of its business and insufficient independent board representation at Xstrata.
Under a complex structure, Xstrata investors will be able to vote on the merger at the miner’s extraordinary general meeting on November 20 as well as on a lavish multi-million-pound plan to retain managers.
Even a rejection of the retention package would not endanger the merger.
Pirc said that excluding the chairman, only three Xstrata board directors are considered to be independent according to Pirc’s own guidelines.
“This raises concerns about the objectivity with which the decision behind the deal was taken by the Xstrata-claimed independent directors,” it added.
Pirc said there were also concerns over a possible executive influence on the decision “due to the rather lucrative package involved should the deal be approved and realised”.
In September, the commodities trader bowed to investor pressure and raised its bid to 3.05 new shares for every Xstrata share from an earlier ratio of 2.8.
ISS, the shareholder advisory firm closely followed by US institutional investors, in August recommended shareholders vote against the tie-up.