Rio Tinto has officially confirmed it is not pursuing a merger or “other business combination” with Glencore.
The announcement follows a period of evaluation that began early last month. After assessing the potential deal, Rio Tinto “is no longer considering a possible merger or other business combination with Glencore”, the company said in a statement. Rio Tinto also said it was “prioritising long-term value”.
It was reported that key sticking points were the “control premium” sought by Glencore shareholders and governance issues, which Glencore attempted to address by selling its assets in the Democratic Republic of the Congo (DRC) to the Orion Critical Mineral Consortium.
Glencore has released its own statement, echoing Rio’s long-term value concerns.
“The key terms of the potential offer were Rio Tinto retaining both the chairman and chief executive officer roles and delivering a proforma ownership of the combined company which, in our view, significantly undervalued Glencore’s underlying relative value contribution to the combined group, even before consideration of a suitable acquisition control premium,” Glencore said in the statement.
“We concluded that the proposed acquisition on these terms is not in the best interests of Glencore shareholders. It 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, and apportioning material synergy value potential.”
February 5 (UK time) marked a key date in merger talks, as under British law it served as the “put up or shut up” deadline for Rio Tinto to either announce a firm intention to make an offer for Glencore or formally withdraw from the process.
