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Rio Tinto says it rejected Glencore merger bid
[SYDNEY] Resources giant Rio Tinto said on Tuesday it rejected a potential merger with Glencore in July, following a report the Swiss mining rival was in talks with major shareholder Chinalco.
The Anglo-Australian firm also confirmed there were no ongoing talks with Glencore about such a bid, which would have created the world's largest mining firm, worth an estimated US$160 billion.
"In July 2014, Glencore contacted Rio Tinto regarding a potential merger of Rio Tinto and Glencore," Rio said in a statement on Tuesday.
"The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto's shareholders.
"The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter." The denial came after a Bloomberg report Monday that Glencore had approached Rio shareholder Chinalco, China's largest alumina producer, about whether it would be interested in a possible deal.
Rio Tinto is the world's second largest miner and has a market capitalisation of A$107.7 billion (US$94.4 billon), while Swiss commodities trader Glencore became the world's fourth-biggest commodities company after merging with resources giant Xstrata in May 2013.
Analysts have said a Glencore takeover of Rio would give it presence in the iron ore market, one commodity that it does not have sizable operations in.
Rio Tinto shares were up 4.48 per cent to A$60.17 on the Australian share market early Tuesday.
Rio chairman Jan du Plessis added that his firm had made "significant progress in refocusing and strengthening its business" under chief executive Sam Walsh and chief financial officer Chris Lynch.
"The board believes that the continued successful execution of Rio Tinto's strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders," he said.
Glencore reported a net profit of US$1.72 billion during the first half of 2014, while Rio - supported by surging iron ore shipments - recorded a net profit of US$4.4 billion in the six months to June 30. - AFP