August 31, 2012 / 9:00 AM / in 5 years

Activist fund calls for Xstrata board shakeup if bid fails

LONDON (Reuters) - Activist fund Knight Vinke on Friday became the first leading shareholder in Xstrata XTA.L to publicly question the future of the miner’s board if a proposed $31 billion bid from trader Glencore (GLEN.L) collapses at a vote next week.

Several shareholders have already questioned privately whether the members of Xstrata’s board should continue if the planned merger gets shelved, criticizing what they say was a failure to protect the interests of investors other than 34-percent holder Glencore. One shareholder said last week he wanted “wholesale changes”.

“Should the transaction fail to be approved, we intend to consult with other shareholders regarding the composition of the Xstrata board so as to make it more independent and robust,” Knight Vinke said in a brief statement.

Glencore’s long-awaited move on Xstrata is unlikely to succeed on current terms, after the second-largest shareholder in the miner, Qatar Holding, said explicitly on Thursday it would vote down the current offer of 2.8 new Glencore shares for every Xstrata share held.

    Knight Vinke - which owns 0.5 percent of Xstrata according to Reuters data, placing it among the 20 largest institutional investors, excluding Glencore - said it would also vote against the all-share bid unless terms are “materially improved”.

    “If the board of Glencore is unwilling to pay for acquiring the control it seeks, we would support Xstrata’s continuing independence as a fundamentally strong and successful business,” it said. (Reporting by Clara Ferreira-Marques; Editing by Sinead Cruise)

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