LONDON -- Xstrata (LSE: XTA.L) rallied 15 pence, or 2%, to 972 pence in early London trading this morning after the FTSE 100 (UKX) miner confirmed the terms of a merger with commodities trader Glencore International (LSE: GLEN.L).

Among the merger details was the news that Xstrata chief executive Mick Davis would collect a £9,598,475 pay-off when he leaves the combined group after six months. An earlier proposal from Glencore, which had been criticized by investors, had reportedly earmarked Davis a £29 million package.

Glencore shares fell 4 pence, or 1%, to 339 pence in response.

Today's statement confirmed Xstrata had agreed to recommend an all-share "merger of equals" with Glencore, whereby Xstrata investors will receive 3.05 Glencore shares for every Xstrata share held.

Glencore's 339 pence share price therefore values each Xstrata share at 1,034 pence and the entire miner at about £32 billion. The combined group could be valued at about £45 billion.

The merger announcement revealed an unusual voting procedure, whereby investors of both firms could vote against the merger, vote for both the merger and staff retention payments, or vote for the merger but against staff retention payments.

Reportedly paying £140 million, the merger's staff retention package had irked many shareholders that had otherwise been positive on the deal.

Ivan Glasenberg, who is currently Glencore's chief executive and the replacement for Davis as leader of the combined group, said: "We have always been in favor of the proposed retention arrangements to incentivise key Xstrata employees. Their commitment is vital as we look to capture the full synergy and value creation benefits of the transaction and realize the potential of both companies' strong long-term organic growth plans."

Glencore reckons annual savings following the merger should be at least $500 million a year.

Glencore's attempts to buy Xstrata underpin the attractions of the mining sector that were cited in the special Motley Fool report, "The Market's Top Sectors," which looks at the industry in close detail and pinpoints some of the sector's most promising operators.

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