Commodities trader and miner Glencore (LON:GLEN), whose offer to merge with Rio Tinto (LON:RIO) was rebuffed this week, had allegedly explored a stock-exchange listing in the Australian exchange.
A source familiar with the matter told Reuters the possibility is still alive, as “no decision has been taken.”
Down Under would be an attractive addition for Glencore, currently listed in London and Hong Kong, as it would broaden the firm’s shareholder base in a country where investors understand mining stocks, the source added.
Rio confirmed on Tuesday that Glencore was no longer actively considering a merger, and under UK Takeover Panel rules, the Swiss company is now in effect barred from making another approach to the UK group for six months.
Yet no one in the industry thinks CEO Ivan Glasenberg will give up on the idea of a merger between the two mining giants.
The question is whether Rio’s management and shareholders would endorse a deal that could come with no takeover premium. Some analysts think not.
In a note published late Monday, Jake Greenberg, global natural resources specialist at Bank of America Merrill Lynch, said “Nil premium hostile mergers don’t work. The mining sector learned this lesson when Xstrata went after Anglo. Investors will demand a premium and Glencore will not be interested in offering one.”
According to Bloomberg’s analysts, any move by Glasenberg to restart the quest for Rio is set to face concerted political opposition in Australia, the world’s biggest exporter of iron ore and coal.
Glencore is one of the largest mining companies operating in the country with significant energy coal operations in New South Wales, the Mt. Isa copper and gold mine in Queensland state, the McArthur River zinc mine in Northern Territory and nickel projects in Western Australia.
