RIO Tinto managing director Sam Walsh says a merger with Ivan Glasenberg’s Glencore will never happen because it would not clear regulatory hurdles even if Glencore came up with an offer that provided value for Rio.
And the mining boss claims BHP Billiton’s planned South32 spin-off, which BHP chief Andrew Mackenzie describes as a “key differentiator”, is just portfolio management that Rio has already completed.
At a Chatham House event in London, Mr Walsh said the much-hyped prospect of Glencore making a bid for Rio when a six-month “put up or shut up” moratorium ends, and then somehow taking Rio over, was fantasy.
“Part of the reason is value but part of the reason is the anti-trust and people who collect tax and what have you, they’re simply not going to let it happen,” he said.
Mr Walsh added that BHP’s failed $US160 billion takeover of Rio in 2007 fell over primarily because anti-trust regulators would not let it happen.
“The media is infatuated with this (a potential Glencore deal),” Mr Walsh said. “But as I move around investors, investors say, ‘I don’t get it, why are you giving this any air because it actually isn’t going to happen’.”
Under British takeover rules, Glencore is banned from approaching Rio until April. The six-month ban began after Rio confirmed it had knocked back an approach from Glencore last year.
Since then copper prices, which Glencore is more exposed to, have slid, making the smaller company’s stock less valuable, compared with Rio’s, than it had been.
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