Rio Tinto squashes speculation on Glencore merger
07 October 2014
The board of mining major Rio Tinto today said that it is merger not in talks with smaller rival Glencore Plc, which in July 2014, had contacted Rio regarding a potential merger of Rio Tinto and Glencore.
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 had been no further contact between the companies on this matter, Rio Tinto said in a statement.
A merger would have created the world's biggest miner, replacing BHP Billiton.
Rio Tinto remains focused on the successful execution of its strategy, which the board of Rio Tinto said it was confident would continue to deliver significant and sustainable value for shareholders.
Rio Tinto chairman Jan du Plessis said ''Under the leadership of Sam Walsh and Chris Lynch, Rio Tinto has made significant progress in refocusing and strengthening its business''.
''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 adding that Rio Tinto's shareholders stand to benefit from the very considerable value that this will generate.''
Any bid for Rio would need China's blessing, as Chinese state-owned Aluminium Corp of China (Chinalco) owns 9.8 per cent of the company.
Chinalco is sitting on a big loss on its stake, bought in February 2008 for £60 a share, double Rio's current London-listed price, as it sought to block a $127-billion takeover bid from BHP Billiton.
Rio Tinto increased underlying earnings by 21 per cent to $5.1 billion and enhanced operating cash flow by 8 per cent for the first half of 2014.