Miner Glencore free to bid for rival Rio again

Mining firms Glencore and Rio Tinto declined to comment yesterday on the question of whether a deal between the two could be back on the table.

 

Switzerland-based Glencore originally made an estimated £60bn offer for its larger British-Australian rival last August, but in October Rio Tinto revealed that it had rejected the bid.

 

Glencore then stated that it was “no longer actively considering any possible merger transaction with, or offer for the shares of, Rio Tinto”. In making this declaration, Glencore ruled itself out of making another bid for the company for six months – tomorrow sees the end of that moratorium.

 

 

Changes in the commodities market during the intervening period have prompted speculation that another approach by Glencore could be in the offing, given that the firm has shown strength in the middle of a troubled sector. Last month, the miner revealed it had beaten expectations in 2014 to maintain profitability despite declining copper consumption and prices.

 

Meanwhile, despite iron ore prices taking a beating during 2014, Rio Tinto managed to increase its dividend, and announced a $2bn (£1.3bn) share buyback, which may not leave shareholders feeling receptive of a takeover. 

 

Response to the initial offer indicated that the market saw a merger between the two companies as a foregone conclusion. In November, commodities merger expert Ian Hannam said: “This deal will happen sometime in the near future.” And speculation can only build as tomorrow brings with it the possibility of another bid.

 

Both Glencore and Rio Tinto declined to comment yesterday.