According to Reuters, both companies have confirmed that they are discussing a deal in which Rio Tinto may acquire a "partial or full" stake in Glencore. The structure of the deal is expected to include a stock exchange. If the negotiations are successful, the combined company will become the largest in the world by market capitalization, surpassing BHP. However, in light of this news, Rio Tinto's shares in Australia fell by 6.4%.
As Bloomberg reports, the discussions are taking place more than a year after previous attempts at merging were unsuccessful. The company noted that it is considering the possibility of merging both parts and the entirety of the business, including acquisition through stock exchange. Meanwhile, on the American market, Glencore's depositary receipts jumped by 8.8%, while Rio Tinto's shares in Sydney fell by 6.6%.
Both news organizations emphasize that global mining companies are seeking to increase their metal reserves, including copper, amid expected demand growth related to the transition to new energy sources and the development of artificial intelligence technologies. Additionally, Bloomberg reports that Glencore and Rio Tinto have significant assets in the copper industry, and a potential merger could create a new player capable of competing with BHP.
Bloomberg's materials also mention that the discussion of the deal raises questions about the composition of the assets that may be included in the merger: Glencore is one of the leading coal producers, while Rio Tinto has previously exited the coal business. Furthermore, according to British takeover rules, Rio Tinto has until February 5 to confirm its intentions regarding the deal or withdraw from it for a period of up to six months.
