Rio Tinto and Glencore go their separate ways
Our view after merger talks end.
After engaging in merger talks over the past month, Rio Tinto (ASX:RIO) announced that it does not intend to make a firm offer for Glencore (LSE:GLEN). In response, Rio’s Australian-listed shares are unchanged at the time of writing, while Glencore shares closed 7% lower in London overnight.
Why it matters: Under the UK’s “put up or shut up” takeover laws, Rio had until Feb. 5, 2026, to announce a firm intention to make a bid or walk away. While an extension could have been granted by the UK Takeover Panel, the companies were too far apart to pursue this option.
- The sticking point appears to have been Rio’s desire to control the combined group—with its chairman and CEO retaining their roles—while not being willing to pay a high-enough premium to persuade Glencore to agree to terms.
The bottom line: Our fair value estimates of $125 for no-moat Rio and GBX 480 for no-moat Glencore are maintained. Rio shares trade 26% above intrinsic value, while Glencore is now fairly valued.
Big picture: The talks were driven by Rio’s desire to expand its copper exposure due to its view—and that of consensus—that over the longer term, supply will struggle to keep up with rising demand driven by renewables, electric vehicles, data centers, and investment in electricity grids.
- We think Glencore played on this bullish narrative to try to get a deal done. This is especially after temporary supply issues at various mines drove the copper price to historical highs of over USD 6 per pound recently, before falling back to around USD 5.70 now.
- But unfortunately for Glencore shareholders, Rio balked. While the details of the proposed transaction are confidential, an all-share merger would likely have been minimally dilutive for Rio given the premium at which its shares trade.
Between the lines: Given the very bullish sentiment in the copper space, all things equal, we think it is a better time to be selling copper mines rather than buying them.
