Rio Tinto (ASX, LSE, NYSE: RIO) and Glencore (LSE: GLEN) have scrapped plans for a $260-billion merger that would have created the world’s largest mining company.
In a statement on Thursday, Rio Tinto said it was no longer considering a merger or other business combination with Glencore after determining it could not reach an agreement that would deliver sufficient value to its shareholders.
After weeks of discussions, the companies failed to agree on governance and ownership of the combined group. Rio proposed retaining both the chair and CEO roles for pro forma control of the merged entity. Glencore said those conditions materially undervalued its copper business and its overall contribution, making the deal unattractive for its shareholders.
“Price and governance disagreements were at the heart of the breakdown,” analysts at Jefferies wrote in a note. “While a future re-engagement is possible, our base case is that Rio will focus on its standalone strategy.”
The market reacted swiftly. Glencore shares fell nearly 8% in London trading, while Rio Tinto declined about 2.5%.
‘Significant challenge’
“A deal of this size, and with the egos involved, was always going to be a significant challenge,” Ben Davis, an analyst at RBC, said in a note. “We are surprised it was revisited so quickly, clearly something had brought the two back together, and it is unclear what has driven them apart again.”
Representatives for Rio Tinto and Glencore declined to comment.
The Swiss miner and commodities trader was seeking a share-exchange ratio that would have given its investors about 40% of the combined company, Bloomberg reported.
Had the deal gone ahead, the combined group would have emerged as the world’s largest copper producer, accounting for about 7% of global output, alongside dominant positions in iron ore, coal and other key commodities. Rio, which generates most of its profit from iron ore, has been working to strengthen its copper portfolio through projects such as the Resolution Mine in Arizona.
Third time not the charm
The collapse marks the third failed attempt at a tie-up between the two miners. Talks in 2014 and then again in late 2024 collapsed over valuation concerns, Rio’s reluctance to pay a significant premium and sharp differences in corporate culture and governance. During those discussions, Glencore had pushed for its chief executive, Gary Nagle, to lead the combined company.
Subsequent leadership changes did little to reset the dynamic. Rio is now led by chief executive Simon Trott and chaired by Dominic Barton, seen as more open to dealmaking, while Nagle has repeatedly described a Rio-Glencore merger as the “most obvious” deal in mining.
While people familiar with the discussions say both sides had recently shown greater willingness to compromise, the latest attempt ultimately fell short, ending what many investors had dubbed the merger of the decade.
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