Rio Tinto and Glencore Halt Merger Discussions for Third Time

Overview of the Merger Discussions

By Clara Denina and Pratima Desai

Previous Merger Attempts

LONDON, Feb 5 (Reuters) - Rio Tinto on Thursday ended takeover talks with rival Glencore, saying the two companies were unable to reach an agreement that would deliver sufficient value to shareholders.

Market Reactions

The proposed merger, first announced in January, would have created the world's largest mining company, with a market value exceeding $200 billion.

Future of Mining Mergers

It is the second round of failed discussions in just over a year, following an earlier approach by Glencore in late 2024. Talks late last year were also initiated by Glencore, according to a source familiar with the matter.

Glencore's shares fell as much as 10.8% to 456 pence. Rio Tinto's London-listed shares were down 2.5% at 6,820 pence by 1639 GMT.

Rio also rejected a merger approach from Glencore in 2014, saying it was not in the best interests of shareholders.

However, the latest round of discussions marked a departure from past efforts. The source described it as "the first time there has ever been a really serious, rigorous due diligence process".

NOT ONLY COPPER

Although transition metal copper was an obvious motivation for a deal, Rio Tinto was seeking to acquire Glencore in its entirety, including its coal assets and marketing business.

"We concluded that the proposed acquisition ...does not reflect our view on long-term, through the cycle relative value, including not adequately valuing our copper business, and its leading growth pipeline," Glencore said in a statement.

Glencore talked up its copper assets at an investor day in December, when it said it aims to reach 1.6 million metric tons by 2035 through new and restarted mines and streamlined operations, from 852,000 tons last year.

Global copper demand is expected to rise 50% by 2040, benefitting from the energy transition and artificial intelligence demand, and global miners are racing to bulk up.

Analysts at HSBC had estimated an average deal premium of 30%, which would have given Glencore's shareholders 38% of a combined company.

The companies did not reveal the terms proposed and rejected.

The abandoned talks echo other ambitious mining deals that have faltered, including BHP's $49  billion approach for Anglo American, which unravelled over concerns about the structure of the offer, even as the sector pushes to consolidate amid rising demand for metals.

The only deal still proceeding is a plan for a $53 billion all-stock, nil-premium merger between London-listed Anglo American and Canada's Teck Resources that would create the world's fifth-largest copper producer.

(Reporting by Clara Denina, Pratima Desai, Yamini Kalia, Raechel Thankam Job and Yadarisa Shabong; Editing by Alan Barona and Anil D'Silva, Kirsten Donovan)