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LONDON—Xstrata PLC’s effort to seal a merger with Glencore International PLC has run into several unexpected obstacles since it was unveiled nine months ago. Now another hurdle is looming that could prove fatal.
Shareholders next week will vote on the merger using an untested ballot system devised to sidestep investor opposition to retention payments that Xstrata has proposed.
As next Tuesday’s vote approaches, people on both sides of the deal have expressed confidence that the merger will be approved. But behind the scenes, they are fretting that the complex voting procedure contains land mines that could blow up the deal even though most shareholders seem to be in favor of it.
The proposed merger would create a natural-resource company with a market value currently measured at $68 billion. It has traveled a rocky path since it was first proposed in February. Glencore originally proposed to pay 2.8 of its shares for each Xstrata share in a deal that would have awarded several senior Xstrata executives, including Chief Executive Mick Davis, millions of dollars for staying with the combined company for three years. That proposal called for Xstrata shareholders separately to approve the price and the retention payments.