In the letter, Richards said the whole process that has amounted to this deal has been disappointing and that it undermines the true value of Xstrata.
‘It was with considerable disappointment that we read this morning’s announcement that the proposed merger with Glencore is to be recommended,’ said Richards.
‘The process through which this deal emerged and has been overseen has been deeply disappointing. 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.’
He added: ‘The extraordinary executive payments envisaged by the board, firmly incentivising the deal, have done nothing but exacerbate that perception and the related concerns that exist.
Richards emphasised that this deal is effectively seen as a takeover which will mean a ‘significant’ change in culture, leadership, quality and risk profile for Xstrata shareholders.
‘The benefits of doing this deal seem heavily weighted in favour of Glencore, which clearly needs this far more than Xstrata does,’ said Richards.
‘Looking through the short-term fillip the deal offers, giving away the expected future returns on the investment that has been made in Xstrata's business, on the cheap, makes no sense to us or for our clients.
‘Anyone wanting the exposure Glencore offers can access that without need for this transaction.’
He added: ‘As a matter of record, we are firmly opposed to this so-called merger of equals, its terms and its implications.’
Xstrata this morning backed the latest merger offer from Glencore, although it is allowing its shareholders to vote against the retention package without blocking the merger. This means shareholders can vote for the deal with or without a retention package for Xstrata’s senior managers.