Qatar Sovereign Fund Raises Xstrata Stake to 5% Before Glencore Merger

Qatar's sovereign wealth fund has raised its stake in Xstrata Plc to a little over 5 percent, which is valued around $2.65 billion, in advance of the Anglo-Swiss miner's intended merger with Glencore International Plc.

Qatar is currently the third largest investor in Xstrata behind Glencore and Blackrock, which own 33.6 percent and 5.43 percent of the shares respectively.

Regulatory filings showed that the Qatar Investment Authority (QIA) built up its Xstrata holding, worth $2.65 billion at current prices, through stock market transactions from around 3 percent when Glencore announced its bid, Reuters reported.

Glencore, the world’s largest publicly traded commodities supplier, agreed in February to buy Xstrata in the biggest ever mining takeover deal. Glencore offered 2.8 new shares for each Xstrata share in an all-share merger of equals. The combination forms a fully integrated $90 billion natural resources group with interests in mining, processing, storage, freight, logistics, marketing and sales.

Sir John Bond, Xstrata's chairman, will hold the same position in the enlarged group. Mick Davis, Xstrata chief executive, will be the chief executive and Ivan Glasenberg deputy chief executive.

In 2011, Glencore earned $186.2 billion in sales and Xstrata had sales worth $33.9 billion. The new group will be looking to capitalize on the surge in demand for commodities from China and other emerging economies.

For the acquisition to be approved it has to be supported by 75 percent of shareholders excluding Glencore. However, the acquisition was opposed by key shareholders like Standard Life Investments and Schroders. They are critical of the terms agreed by Xstrata with many shareholders demanding 3.6 Glencore shares for each of the shares they own.

In the present scenario Qatar's support for Glencore’s acquisition of Xstrata will be extremely critical. Blackrock supports the proposed deal.