Rio Tinto and Glencore's Failed Merger

This month, Rio Tinto walked away from merger talks with Glencore, ending plans for a deal that would have created the world's largest mining company, with a combined value of more than $200 billion. It was the third failed attempt to combine the two groups, after earlier talks came to nothing in 2014 and 2024.

The talks became public on 8 January, when Rio Tinto confirmed it was considering a possible combination with some or all of Glencore's businesses, most likely through an all-share deal. The two companies expected any merger to take the form of Rio Tinto acquiring Glencore through a court-sanctioned scheme of arrangement. Under the Takeover Code, Rio Tinto had until 5 February to either announce a firm offer or confirm it would not bid. The talks followed a wave of consolidation in the sector, including Anglo American's $53 billion merger with Teck, as miners looked to increase their exposure to copper.

The talks collapsed in less than 24 hours as the deadline approached. Under the proposed terms, Rio Tinto would have kept both the chair and chief executive roles in the combined group. Glencore said the terms significantly undervalued its contribution, particularly its copper business and growth pipeline, and did not include a control premium. Rio Tinto said it could not reach an agreement that would deliver value to its shareholders. Analysts at Jefferies said price and governance disagreements were at the heart of the breakdown, and Glencore's shares fell as much as 11% on the news.

Because Rio Tinto confirmed it would not make an offer, it became bound by Rule 2.8 of the Takeover Code. This prevented it from bidding for Glencore for six months unless the Takeover Panel agreed or certain exceptions applied, such as Glencore's board agreeing to the approach. That restriction runs until August 2026.

Even when the strategic case for a deal is clear, disagreements over price and control can end talks at the last moment. The Takeover Code's deadlines mean those disagreements have to be resolved quickly or not at all.