Rio Tinto walks away from USD260b Glencore merger
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The news: Rio Tinto has walked away from talks to acquire Glencore, ending a proposed USD260 billion ($374.5 billion) merger that would have created the world’s largest mining group.
The context: The decision follows more than 18 months of on-and-off discussions, with the latest round announced in early January and ending ahead of a 5 February deadline to make a formal offer.
Rio said in a statement it had “determined that it could not reach an agreement that would deliver value to its shareholders.”
Under UK takeover rules, it is now restricted from making another approach for six months, unless certain conditions are met.
The decision came after the companies failed to agree on terms, and particularly, valuation.
Glencore said in a statement that the proposal “significantly undervalued” its business, including its copper assets, and opposed Rio’s plan to retain both the chair and chief executive roles.
The numbers: Glencore shares dropped between 7% and 11% after the announcement, while Rio shares fell as much as 2.6%.
The sources: Rio Tinto statement, Glencore statement, Bloomberg
