Australian giant Rio Tinto has walked away from merger talks with Glencore after the two companies could not agree on valuation, foiling a mega merger that would have created the world’s biggest mining company.
Rio Tinto confirmed that is no longer considering a possible merger with Glencore after it determined it could not reach an agreement that would deliver value to its shareholders.
Glencore said in a separate statement that Rio Tinto’s offer “significantly undervalued” the company’s underlying value. Rio Tinto had sought to retain both the chairman and CEO roles without offering a large enough premium.
“We concluded that the proposed acquisition on these terms is not in the best interests of Glencore shareholders,” according to the Glencore statement.
“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.”
Glencore said it has a strong standalone investment case, with a well-diversified business across a range of commodities.
“We have optimised and simplified our operating structures, which has promoted accountability and delivery, and supported our achieving, for the second consecutive year, full year production for our key commodities within guidance ranges.”
Both companies had confirmed they were in talks in January but noted that a deal wasn’t certain. The merger talks came after previous discussions failed more than a year ago.
The combined company would have been one of the world’s top copper producers, taking advantage of the high copper prices.
However, analysts have previously flagged cultural differences between the two companies, with Rio Tinto having exited its coal business in 2018.
