Overview
- Glencore disclosed preliminary discussions on a possible combination and said the current expectation is a transaction in which Rio Tinto would acquire Glencore.
- A deal of this scale could create the world’s largest mining company with a combined market value of about $200 billion, topping BHP.
- Public signals suggest a scheme of arrangement that allows flexibility for potential carve-outs, with Glencore’s thermal coal portfolio identified as the chief obstacle after Rio’s 2018 coal exit.
- Glencore’s shares on the JSE surged nearly 14% intraday and closed about 10.5% higher following the announcement.
- Analysts cite copper as the strategic driver of the talks while warning that any bid may require significant equity dilution, a sizable premium and very large synergies to stack up.