The Glencore-Xstrata deal, which would create the world's fourth-largest diversified mining company with a market capitalization of about $70 billion, is facing growing opposition, which could scuttle the merger once and for all.
Richard Buxton, head of U.K. equities at Schroder Investment Management, a top-20 shareholder in Xstrata, told The Wall Street Journal on Thursday that the deal is "dead in the water” unless Glencore can offer 3.25 shares for every Xstrata share.
Under the terms of the proposed merger in February, Glencore offered 2.8 shares.
Activist fund Knight Vinke, which owns 0.5 percent of Xstrata, according to Reuters data, publicly questioned the future of the miner's board on Friday if the proposed $31 billion bid collapses at a vote next week.
"Should the transaction fail to be approved, we intend to consult with other shareholders regarding the composition of the Xstrata board so as to make it more independent and robust," Knight Vinke said in a statement.
The activist fund said it would also vote against the all-share bid unless terms are "materially improved.“
Xstrata’s management has come under criticism in recent months for its failure to protect the interests of investors over the interests of Glencore, which holds a 34 percent stake in the company.
Qatar Holding, which is the second-largest investor in Xstrata, on Thursday voiced its determination to vote against Glencore’s all-share offer, “unless the terms were improved.”
Qatar has become an unexpected kingmaker in the Xstrata deal after spending more than 3 billion pounds ($4.7 billion) to raise its stake to 12.3 percent, nearly enough to single-handedly vote down the bid from Glencore, which is not allowed to vote on the deal.
The investment arm of the Gulf state's sovereign wealth fund said in June that Glencore could not count on its support below 3.25 Glencore shares for every Xstrata share.
Qatar and other naysayers such as Schroders, which owns about 1 percent of Xstrata, can potentially block the deal in a shareholder vote set for September 7th because just a 16 percent vote against the deal is needed to prevent it from going through.
Earlier this month Glencore said it would stick to its guns, offering $30 billion for Xstrata, although the commodities trader reported better-than-expected results.
Glasenberg has told reporters that the deal isn’t a "must-do" for the company at the moment, and it could return to the offer in the future.
Xstrata shares were worth around 2.5 times Glencore’s share price on Friday morning, a significant discount to the proposed deal ratio of 2.8.
By Liza Jansen, special for CNBC.com, twitter: @lizajansen