Rio Tinto Rejects Glencore's £100bn Merger

Written By Unknown on Selasa, 07 Oktober 2014 | 14.47

Mining giant Rio Tinto has rejected a potential merger with key competitor Glencore, which would create the world's biggest commodities firm.

Rio Tinto, which is based in Australia and Britain, said it had rejected a July approach from its Switzerland-based rival, communicating the decision in August.

The merged companies would be valued at around $160bn (£100bn).

The announcement comes after reports that Glencore was in talks with major shareholder Chinalco, which owns 9.8% of Rio Tinto stock.

The Anglo-Australian firm also insisted there were no ongoing talks with Glencore about such a bid.

In a statement, the company said: "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."

Chairman Jan du Plessis added: "Under the leadership of Sam Walsh and Chris Lynch, Rio Tinto has made significant progress in refocusing and strengthening its business.

"The board believes that the continued successful execution of Rio Tinto's strategy will allow (it) to increase free cash flow significantly in the near term and materially increase returns to shareholders.

"Rio Tinto's shareholders stand to benefit from the very considerable value that this will generate."

Bloomberg said Glencore had approached Rio shareholder Chinalco, China's largest alumina producer, about its interest in a possible deal.

Rio Tinto is the world's second largest miner and has a market capitalisation of AUD$107.7 billion (£60bn).

Glencore became the world's fourth-biggest commodities company after merging with resources giant Xstrata in May last year.

Tactically, a Glencore takeover of Rio would give it presence in the iron ore market, one commodity that it does not have sizable operations in.

Rio has significant iron ore mining interests, particularly in Australia, which have fed demand in China for industry and construction.

Shares in Rio Tinto were up around 5% in early London trades on the news.


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