Qatar is 3rd Largest Shareholder in Xstrata

Qatar became the third-largest stockholder of mining firm Xstrata after it bought 5 percent of the company's shares at $A2.65 billion. The purchase was made by the country's sovereign wealth fund.

With the buy-in, Qatar follows Glencore and Blackrock as the majority shareholders. Glencore owns 33.6 per cent and Blackrock 5.43 per cent, according to The Daily Telegraph. Qatar displaced Standard Life and Legal & General, which both control 2.8 per cent each, as the third largest investors in Xstrata.

The entry of Qatar boosts the chances of the mega merger of Xstrata and Glencore which requires 75 per cent backing of shareholders.

"Getting the Qataris on board will be good for Glencore. They are not activist investors and won't be looking at gaining management influence. But they are opportunistic and won't commit a pound unless they are seeking clear benefits," Reuters quoted a banker based in Dubai.

Other major Xstrata shareholders who are not in favour of the merger are angry at the entry of Qatar because they fear a corporate marriage could undervalue Xstrata.

Although a substantial number of top-10 Xstrata shareholders indicate they would reject the merge, Schroders Fund Manager Richard Burton was quoted by The Telegraph as saying that votes for the merger are almost assured for Glencore Chief Executive Officer Ivan Glesenberg.

Mr Glesenberg and Xstrata Chief Executive Officer Mick Davis are expected to join forces to convince shareholders to vote for the merger.

Dubbed as the merger of equals, the deal provides for Xstrata shareholders to get 2.8 Glencore shares for every Xstrata stock they hold. However, reports said that many Xstrata owners want 3.6 Glencore stocks. They also question that the proposed merger does not reflect the long-term earnings potential of Xstrata against the commodities trader's volatility.

"In the absence of a control premium, this roadshow is all about convincing us that there is equality in the management structure.... But they still have lots of work to do to prove this deal is a good idea for Xstrata investors - and that means changing the ratio," The Sydney Morning Herald quoted an Xstrata shareholder.

Blackrock, known for its close ties with Glencore, was also criticised for its support of the planned merger.