Glencore's $65bn deal close to collapse The logo of Swiss commodities giant Glencore is seen at its headquarters on October 12, 2011 in Baar near Zug The $65bn merger between commodities trader Glencore and miner Xstrata is verging on collapse Leading fund mangers have come out against both the retention payments and the share exchange ratio There is just over two weeks until Xstrata shareholders are set to vote on the deal Both companies now concede it is unlikely that the deal will go through in its current form (Financial Times) -- The $65bn merger between commodities trader Glencore and miner Xstrata was the verge of collapse after the sovereign wealth fund of Qatar, the second largest shareholder in the miner, opposed the terms of the deal. Glencore on Wednesday said it was considering a proposal from Xstrata to amend management incentives linked to the deal that would include a £29m payment over three years to Mick Davis, the mining group's chief executive, to rescue the deal. Leading fund mangers, including Standard Life, Schroders and Fidelity, have come out against both the retention payments and the share exchange ratio in the past few weeks. In a short statement issued on Wednesday Glencore said it had received a proposal from the board of Xstrata in relation to "certain amendments to the management incentive arrangements." The announcement on Tuesday night by Qatar Holding, which has a near 11 per cent stake in Xstrata, means that about a quarter of shareholders are against the deal's current terms, more than enough to block the merger. Qatar said it saw merit in a combination of the two companies but was "seeking improved merger terms." Glencore is offering 2.8 of its shares for each of the miner's, but Qatar said an exchange ratio of 3.25 a share "would provide a more appropriate distribution of benefits of the merger." Glencore shares moved 1.6 per cent lower to 297.9p on Wednesday morning, while Xstrata rose just 0.1p to 785.9p. The sizeable gap between the current deal terms and Qatar's view of Xstrata's value suggests that the two companies will have to substantially renegotiate the deal. However, Mr Davis and his counterpart at Glencore, Ivan Glasenberg, met in London on Monday and discussed the shareholder revolt against the merger. With just over two weeks until Xstrata shareholders are set to vote on the deal, both companies now concede it is unlikely that the deal will go through in its current form. "The deal is not looking positive," said one person close to the merger talks. Sir John Bond, Xstrata's chairman, and David Rough, senior independent director, have started to draft alternative packages for Xstrata executives "in line with shareholder feedback," according to the person familiar with the deal. Xstrata could seek to reopen discussions over the merger ratio, which Glencore is likely to resist. As part of the merger, Xstrata non-executive directors had insisted on retention packages, which totalled £173m for 73 senior employees, believing it crucial to keep the miner's core team in place. Investors warned they wanted significant changes to the package, rather than tweaks. A lot of investors are very unhappy. The companies will have to make some far-reaching changes before they win over investors," said a top-20 shareholder. The proposed payouts ignited a fresh round of shareholder activism weeks after investor rebellions forced out a number of UK business leaders, including the heads of insurer Aviva and publishing group Trinity Mirror. Additional reporting by David Oakley in London