Rio Tinto and Glencore, two of the world’s largest mining companies, recently engaged in brief merger discussions.
However, these talks have since ended without any agreement, according to a report by Reuters, citing sources.
The discussions between Rio Tinto and Glencore did not progress beyond the initial stages, the report said.
The potential merger, previously reported by Bloomberg, could have been the largest in the mining industry with a combined market value of approximately $158bn.
Both companies declined to comment on the matter.
Ben Cleary, portfolio manager at Tribeca Investment Partners, commented on the potential merger, stating that Rio Tinto would need to offer a significant premium to Glencore.
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By GlobalData
“Anything under five pounds wouldn’t make sense for Glencore given… material capital returns this year,” he said.
Cleary also mentioned a “definite culture clash” between the more conservative Rio Tinto and the more aggressive Glencore.
According to the report, Rio Tinto’s US-listed shares fell by 0.5% in extended trading following the merger news, while Glencore’s American Depository Receipts rose by 2.4%, having surged nearly 9% earlier.
This is not the first time the two companies have considered merging. In 2014, Rio Tinto rejected a merger offer from Glencore, citing shareholder interests.
RBC analyst Kaan Peker noted that a deal for Glencore could provide a clean exit for large investors including its largest shareholder and former CEO Ivan Glasenberg, who holds a 9.93% stake.
Peker also highlighted potential savings of $1bn from combining their marketing and sales operations.
While Rio Tinto may be interested in Glencore’s tier-one copper assets in Chile and Peru, it might be less keen on assets in the Democratic Republic of Congo or the coal business, which Rio exited last decade, Peker added.
The merger talks highlight the ongoing interest among global miners to strengthen their position in metals like copper, which are expected to be in high demand as industries transition to cleaner energy sources.
Rio Tinto has been active in acquisitions, agreeing to buy US-listed lithium producer Arcadium for $6.7bn (£5.5bn) last year. Meanwhile, Glencore acquired Teck Resources’ steelmaking coal unit for $6.9bn (SFr6.29bn).
