Glencore shares fly as it plots £200bn mega-merger with Rio Tinto
Glencore and Rio Tinto are in talks about a £200billion mega-merger to create the world’s largest mining company.
In a statement that stunned the industry last night, Glencore said it is ‘in preliminary discussions with Rio Tinto about a possible combination’ that could include parts of their businesses or a full-blown merger.
Shares in Glencore are trading 8.6 per cent higher this morning, while Rio Tinto eased 2.83 per cent in London, having closed down 6.27 per cent in Australia.
The two mining giants confirmed in separate statements to the market this morning that they were in talks about a 'combination' of the businesses, which could include an all-share merger.
The talks, nearly a year after previous negotiations over a possible deal collapsed, come as global mining groups compete for dominance in the lucrative copper market.
A deal would bring together two of the FTSE 100’s biggest companies – though it could raise fresh questions over their future on the London stock market.
The price of copper, which is used in everything from electrical wiring and plumbing to solar panels, wind turbines and battery storage, has soared to record highs above $13,300 a ton this week due to fears over a shortage of supplies.
The recent tie-up between London-listed Anglo American and Canada’s Teck Resources – to create a £40billion mining giant based in Vancouver – has piled pressure on others to beef up their operations.
FTSE mega-merger: Glencore said it is 'in preliminary discussions with Rio Tinto about a possible combination
Both companies own huge copper mines in Chile and have fended off takeover approaches from larger rivals with Anglo last year rejecting a £39billion bid from BHP. That has led to a major shake-up at Anglo, including the possible sale of its
De Beers diamond business. It has also raised questions about the future of Anglo’s Woodsmith potash project in North Yorkshire.
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Glencore chief executive Gary Nagle last month told investors he wanted to turn his company into the ‘biggest copper producer in the world’.
In a statement last night, after the Financial Times reported that talks about a merger with Rio were back on, Glencore said a deal could involve ‘a possible combination of some or all of their businesses’ and even ‘an all-share merger between Rio Tinto and Glencore’.
The company added: ‘There is no certainty that the terms of any transaction or offer will be agreed, nor as to the terms or structure of any such transaction or offer, if agreed.’
Rio Tinto confirmed the companies ‘have been engaging in preliminary discussions about a possible combination of some or all of their businesses, which could include an all-share merger between Rio Tinto and Glencore’.
Any merger would legally involve the acquisition of Glencore by Rio Tinto.
Under City takeover rules, Rio Tinto has until 5pm on February 5 to make a firm offer for Glencore or walk away.
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