Rio Tinto, Glencore shelve ambitions to form world's largest miner, abandons $200 billion deal

Rio Tinto has walked away from takeover talks with Glencore, ending months of negotiations over a tie-up that would have reshaped the global mining industry.

The proposed merger, first announced in January, would have created the world's largest mining company, with a market value exceeding $200 billion. Rio said on Thursday that the two companies couldn’t strike a deal that delivered sufficient value to shareholders.

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

Other ambitious mining deals have also faltered, including BHP's (BHP.AX), opens new tab $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.

Glencore's shares closed 7% lower at 467 pence. Rio Tinto's London-listed shares were down 2.6% at 6,820 pence

"The two companies may re-engage at some point in the future, but that is not our base case," said Jefferies analyst Christopher LaFemina, adding that Rio would likely go it alone.

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"There are various ways for Glencore to unlock value, but getting acquired at a premium in an all-share deal to form a combined company that could have been the "go-to" stock in the sector would have been the simplest and most elegant path to a significantly higher share price," he said.

NOT ONLY COPPER

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".

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.

Analysts at HSBC had estimated an average deal premium of 30%, implying Rio's offer price at 535 pence per share, which would have given Glencore's shareholders 38% of a combined company. Another source said that Glencore wanted its shareholders to have 40% of the company.

"Just wasn't a big enough premium for Glencore," that source said.

Glencore's 2011 IPO price of 530 pence per share, a level the miner and trader only surpassed a decade later, has served as a benchmark for management, who were seeking a further premium on that valuation to 40%, a third source close to the matter said.

The companies did not reveal the terms proposed and rejected.
Glencore talked up its copper assets at an investor day in December, when it said it aims to reach 1.6 million metric tonnes by 2035 through new and restarted mines and streamlined operations, from 852,000 tonnes last year.

Global copper demand is expected to rise 50% by 2040, benefiting from the energy transition and artificial intelligence demand.