Glencore bid to merge rejected by Rio Tinto
UPDATED — Resources giant Rio Tinto has revealed it rejected a potential merger with Glencore in July, following a report the Swiss mining rival was in talks with major shareholder Chinalco.
The Anglo-Australian firm also confirmed there were no ongoing talks with Glencore about such a bid, which would have created the world's largest mining firm, worth an estimated US$160 billion.
"In July 2014, Glencore contacted Rio Tinto regarding a potential merger of Rio Tinto and Glencore," Rio said in a statement Tuesday.
"The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto's shareholders.
"The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter."
Glencore said its suggestion had taken the form of "an informal enquiry by telephone call to Rio Tinto, seeking to gauge whether there might be any interest at Rio Tinto in investigating some form of merger between the two companies".
"Glencore confirms that it is no longer actively considering any possible merger transaction with, or offer for the shares of, Rio Tinto," the company said in a statement.
The denial came after a Bloomberg report Monday that Glencore had approached Rio shareholder Chinalco, China's largest alumina producer, about whether it would be interested in a possible deal.
Rio Tinto is the world's second largest miner and has a market capitalization of Aus$107.7 billion (US$94.4 billon), while Swiss commodities trader Glencore became the world's fourth-biggest commodities company after merging with resources giant Xstrata in May 2013.
Analysts have said a Glencore takeover of Rio would give it presence in the iron ore market, one commodity that it does not have sizeable operations in.
Rio Tinto shares jumped on the revelation, ending 0.78 percent up in London trade at 3,020.5 pence after soaring 5.71 percent earlier.
Rio chairman Jan du Plessis said his firm had made "significant progress in refocusing and strengthening its business" under chief executive Sam Walsh and chief financial officer Chris Lynch.
"The board believes that the continued successful execution of Rio Tinto's strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders," he said.
Glencore reported a net profit of US$1.72 billion during the first half of 2014, while Rio — supported by surging iron ore shipments — recorded a net profit of US$4.4 billion in the six months to June 30th.
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The Anglo-Australian firm also confirmed there were no ongoing talks with Glencore about such a bid, which would have created the world's largest mining firm, worth an estimated US$160 billion.
"In July 2014, Glencore contacted Rio Tinto regarding a potential merger of Rio Tinto and Glencore," Rio said in a statement Tuesday.
"The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto's shareholders.
"The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter."
Glencore said its suggestion had taken the form of "an informal enquiry by telephone call to Rio Tinto, seeking to gauge whether there might be any interest at Rio Tinto in investigating some form of merger between the two companies".
"Glencore confirms that it is no longer actively considering any possible merger transaction with, or offer for the shares of, Rio Tinto," the company said in a statement.
The denial came after a Bloomberg report Monday that Glencore had approached Rio shareholder Chinalco, China's largest alumina producer, about whether it would be interested in a possible deal.
Rio Tinto is the world's second largest miner and has a market capitalization of Aus$107.7 billion (US$94.4 billon), while Swiss commodities trader Glencore became the world's fourth-biggest commodities company after merging with resources giant Xstrata in May 2013.
Analysts have said a Glencore takeover of Rio would give it presence in the iron ore market, one commodity that it does not have sizeable operations in.
Rio Tinto shares jumped on the revelation, ending 0.78 percent up in London trade at 3,020.5 pence after soaring 5.71 percent earlier.
Rio chairman Jan du Plessis said his firm had made "significant progress in refocusing and strengthening its business" under chief executive Sam Walsh and chief financial officer Chris Lynch.
"The board believes that the continued successful execution of Rio Tinto's strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders," he said.
Glencore reported a net profit of US$1.72 billion during the first half of 2014, while Rio — supported by surging iron ore shipments — recorded a net profit of US$4.4 billion in the six months to June 30th.
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