Rio Tinto abandons £190bn mega-merger with Glencore
A proposed £190bn mega-merger between mining giants Rio Tinto and Glencore has collapsed after both sides failed to agree on a price.
Riotinto had been hoping to grab Glencore’s 44pc share in the Collahuasi copper mine in Chile - Vismedia A proposed £190bn mega-merger between mining giants Rio Tinto and Glencore has collapsed after both sides failed to agree on a price. Rio Tinto, the world’s largest mining company, on Thursday said it would abandon its pursuit of the Swiss-headquartered firm after talks to create a company nicknamed “GlenTinto” by analysts ended in failure. In a brief statement, Rio Tinto said it “could not reach an agreement that would deliver value to its shareholders”. In response, Glencore said Rio was not offering a sufficient premium for taking full control of the merged group.
Pointedly, it also said Rio had demanded the power to appoint the chief executive and chairman of the combined group. The collapse of talks marks the third time Rio Tinto has failed to reach an agreement to buy Glencore, having previously launched takeover approaches in 2014 and 2024. The two sides had revealed they were in merger talks on Jan 8 to combine two FTSE 100 giants. Rio had been hoping to snaffle Glencore’s 44pc share in the Collahuasi copper mine in Chile, one of the world’s biggest copper deposits. Global mining giants are scrambling to grab as big a share of the world’s proven copper reserves as they can.
A supply crunch is looming: mines cannot open or expand fast enough to keep up with an expected surge in demand from the electrification of the global energy industry. The copper price is already trading at record highs. Despite this pressure, Rio looks to have baulked at the price Glencore was seeking. The company was wary of mergers under the previous chief Jakob Stausholm. New boss Simon Trott told Rio shareholders in December that he would consider mergers but would be disciplined in how much he and his team were prepared to pay. Simon Trott told investors in December that Rio could rely on ‘growth options’ from projects the miner is developing itself - Carla Gottgens/Bloomberg Mr Trott said: “Our focus is always around what do we bring and what synergies do we liberate.” In its own statement, Glencore said Rio had undervalued the target’s copper assets and “growth pipeline” and had in effect demanded too much control.
The Swiss-headquartered firm said: “The key terms of the potential offer were Rio Tinto retaining both the chairman and chief executive officer roles and delivering a proforma ownership of the combined company which, in our view, significantly undervalued Glencore’s underlying relative value contribution to the combined group, even before consideration of a suitable acquisition control premium.” Rio Tinto is worth about £116bn and Glencore £55bn. Including debt and cash, the merged company could have been worth £190bn. The price of Rio shares dropped about 2pc after the announcement. Glencore stock fell 7pc.
Story continues The big miners have been struggling to find major new copper projects to grow their pipelines. This prompted Australian behemoth BHP to launch a failed bid for UK-listed Anglo American in 2024. Anglo American then struck a deal last year to merge with Canada’s Teck Resources. That put fresh pressure on the other players to step up their hunt for acquisitions. Glencore said on Thursday that it did not need to merge with a rival like Rio. “Glencore’s standalone investment case is strong,” it said, pointing to its “exceptional portfolio of copper projects”. Mr Trott told i
nvestors in December that Rio could rely on “growth options” from the projects the miner is developing itself rather than needing to grow through takeovers.