Shares in Rio Tinto jumped in New York on Monday after a report that it could face a takeover bid from rival Glencore to create a £100bn mining giant.
The US-listed shares of Rio initially rose nearly 20% after Bloomberg reported that Glencore had approached the largest shareholder in Rio to gauge the appetite for a deal.
Tie-ups between companies in the mining sector are often the subject of speculation, and rumours about a marriage between Rio and Glencore have swirled of late. Both companies have primary listings in London; a deal between the two would make the enlarged company the biggest stock market listed mining group in the world, overtaking BHP Billiton.
Glencore is said by Bloomberg to have approached Chinalco, the Chinese company which has a 10% stake in Rio, about the possibility of an offer. Bloomberg reported that no formal offer had been made. Shares in London, where Glencore and Rio have their main stock market listing, had closed for trading when the report first appeared. Rio’s US shares fell after the initial euphoria to be 7% higher in afternoon trading.
Neither company would comment, but analysts at Bernstein published research last month exploring the options for Glencore, a company it argued was focused on conducting more acquisitions under its ambitious boss Ivan Glasenberg. It controversially bought Xstrata last year.
Bernstein analysts wrote last month: “A Rio Tinto-Glencore combination would create market-leading positions in iron ore, copper, nickel, zinc and coal as well as significant optionality around a number of lesser metals and minerals. Moreover, it would create the biggest and most diversified mining company on the planet.”
