Qatar backs Glencore-Xstrata deal - FT.com The Qatari sovereign wealth fund that is Xstrata's biggest independent shareholder said it would vote in favour of the miner's proposed $80bn merger with commodity trader Glencore regardless of whether a controversial management incentive package is approved, giving the deal a greater chance of passing. The fund, Qatar Holding, which has become a pivotal player in the negotiations, clarified its voting plans on Thursday, saying it would abstain in a vote to approve a management incentive package (MIA) that was put in place to retain key mining talent after the deal is completed. The package was recommended by Xstrata's board. [Qatar Holding] strongly believes that retaining Xstrata's operational management is of critical importance to the successful and stable integration of the two companies, the completion of key projects within agreed timescales and to maximising the benefits of the merger. However, QH is conscious of the sensitivities concerning governance issues in the UK and does not feel it appropriate to influence the outcome either way. While the fund has been supportive of the merger, it has not been certain how it would cast its votes. Because it holds more than 12 per cent of Xstrata shares, it could block the deal. "In a nutshell, this means the deal is all but done, however there is now an increased chance of no Xstrata MIA given governance departments now have increased leverage to vote against the MIA," said Ash Lazenby, an analyst at Liberum, in a research note. In September, Xstrata hammered out a novel voting structure in an attempt to give investors the opportunity to vote on the deal without having to approve the MIA, which is worth about £140m. ISS, the shareholder advisory group closely followed by US institutional investors, has said investors should vote against the payout. At a meeting on November 20, or by proxy by November 16, investors will have three votes to cast. The first resolution is on whether to support the merger subject to the management incentive arrangements being approved; a second is to support it subject to the MIA not being approved. Both these resolutions require 75 per cent by value to approve them. With Qatar's support of both options, people close to the deal believe it gives greater chance of the second resolution being passed. Investors will also be asked to vote on the pay package which has a lower, 50 per cent majority threshold required. Mark Kelly, at Olivetree Securities said: "This decision by Qatar impairs the chance of the pay deal getting approved and investors will probably now vote for Resolution 2 to ensure the deal passes." Xstrata and Glencore had no immediate comment. The ratio at which the shares of Xstrata and Glencore trade jumped to 2.91 on the news, the highest since the deal was announced and up from 2.86 on Wednesday. Xstrata shareholders are being offered 3.05 Glencore shares for every share they hold, and the move closer to the offer price suggests a greater market expectation of the deal being approved.