Rio Tinto merger talks with Glencore

Rio Tinto has dismissed media reports that it is in talks with Glencore about a possible merger. The world’s largest miner Rio Tinto said it held talks with Glencore in July about a possible tie-up, but concluded that a combination was not in the best interests of 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,” Rio Tinto said. Shares in Rio Tinto jumped in New York on Monday after a report that it could face a takeover bid from rival Glencore to create a £100bn ($160bn) mining giant. Bloomberg reported on Monday that Glencore had "reached out" Rio's largest shareholder, Chinalco, to gauge its interest in a potential deal. The discussions with the state-backed Chinese company, which owns 9.8% of Rio Tinto, took place in recent weeks, according to Bloomberg. “A Rio Tinto-Glencore combination would create market leading positions in iron ore, copper, nickel, zinc and coal as well as significant optionality around a number of lesser metals and minerals,” according to analysts at Bernstein. Rio Tinto said it remains focused on the successful execution of its strategy, which the board is confident will continue to deliver significant and sustainable value for shareholders. “The board believes that the continued successful execution of our strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders,” said chairman Jan du Plessis. “Rio Tinto’s shareholders stand to benefit from the very considerable value that this will generate.”