Threadneedle Investments, one of the 25 largest shareholders in Xstrata , said on Monday it remains firmly opposed to the recommended merger with trader Glencore , which it says gives away the miner's future earnings "on the cheap".
In a letter sent to the board of Xstrata, Iain Richards, head of governance and responsible investment at Threadneedle, described the process through which the deal has emerged and evolved as "deeply disappointing", and making "no sense" for its clients.
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"The apparent target fixation on doing a deal has, to our minds, been at the expense of proper consideration being given to the quality and value imbedded in Xstrata and its good prospects as a stand-alone business," Richards said.
"No one should be in any doubt that this is effectively seen as a takeover, which will ultimately see a significant change in culture, leadership, quality and risk profile for Xstrata shareholders. The benefits of doing this deal seem heavily weighted in favor of Glencore, which clearly needs this far more than Xstrata does."
Xstrata gave its long-awaited blessing to Glencore's $33 billion bid on Monday, bowing to investor pressure by revising the deal's structure to ensure a controversial plan to retain the miner's top managers does not scupper the tie-up.
(Reporting by Sinead Cruise, editing by Laurence Fletcher)