Mining giant Rio Tinto abandons Glencore merger bid

British-Australian miner Rio Tinto said Thursday that it was ending talks to merge with smaller Swiss resources giant Glencore, a deal that would have created the world’s largest mining firm. “Rio Tinto has determined that it could not reach an agreement that would deliver value to its shareholders,” the group said in a statement. Together, the two companies would have been valued at around US$260 billion.

Glencore said separately that the terms offered by Rio Tinto “significantly undervalued Glencore’s underlying relative value,” including not adequately valuing its copper business. “The parties were unable to reach agreement on the terms of a combination,” which included Rio Tinto keeping its chairman and chief executive as heads of the combined company, Glencore said in a statement. Both stocks ended lower on London’s FTSE 100 index, with Glencore sliding seven percent and Rio Tinto down 2.6 percent.

The pair last month said they were in preliminary discussions about combining some or all of their businesses, in an all-share deal. That came after early merger talks between the pair had failed more than a year ago. “It had been thought that Rio Tinto’s new CEO might… succeed in getting the mega merger over the line,” said AJ Bell head of financial analysis Danni Hewson.

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“But with so much at stake and shareholders to appease, it seems ultimately the magic number couldn’t be found, at least not right now,” she added. Before news of the merger plans, Rio Tinto’s new chief executive Simon Trott in December unveiled plans to revamp the British-Australian mining giant as it steps up production of copper. Combining forces would have given the two firms greater leverage to buy copper, a metal that is growing in demand as countries expand electrical networks to harness renewable energies.

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