The $90 billion proposed marriage of Glencore and Xstrata might change if major investors get their way.

By Charlotte Beugge

Mining giant Xstrata has announced that it plans to merge with the world's biggest commodities trader, Glencore creating at one stroke a $90 billion giant.

If the merger takes place, the new company will be the biggest exporter of thermal coal, the largest producer of zinc and will have dominant positions in other metals and commodities.

But it may not be all plain sailing for the union. Two major investment firms, Standard Life Investments and Schroders, which between them own 3.6% of Xstrata, have said they will vote against the deal.

Richard Buxton of Schroder says: "This is a fabulous deal for Glencore, it's probably a great deal for the Xstrata management, but it's a poor deal for Xstrata's majority shareholders."

Buxton manages the £2.5 billion Schroder UK Alpha Plus fund. According to Investment Week, Xstrata is the sixth largest holding in the fund, accounting for 3.4% of the portfolio. The magazine says Standard Life Investments own 2% of Xstrata and quotes its head of equities David Cumming as saying that although there is "merit" in the merger, the deal "clearly undervalues Xstrata's assets".

If the merger does take place, then the newly merged company, Glencore Xstrata International would become the seventh largest company in the FTSE 100 index.

Already, if you've got a tracker fund then you're invested in both companies. Many actively managed funds in addition to the Schroder fund will also have stakes in the companies – including the £2 billion JP Morgan Natural Resources fund which holds Xstrata.