Here is a little history.
Merger of the century
If the deal actually happened, sources in the industry believe there would be “massive regulatory issues” around a Rio-Glencore merger.
“Let’s face it, they (Glencore) had to sell Las Bambas to do Xstrata (merger), what would they have to sell to do Rio?”one resource fund manager said about the potential deal.
“They couldn’t even pull off the nickel merger with Vale in Canada.”
While Glencore doesn’t have the quality assets of Rio Tinto or BHP Billiton, the company has a phenomenal management organization.
“The argument within Glencore is that management have had to work harder because of (the company’s) lesser-quality assets and their internal belief is that they do it better than BHP and Rio because they are not blessed with wonderful assets.”
A merger with Glencore would give Rio shareholder “the best of both worlds” including a chance to share in potential upside in Glencore’s coal, copper and nickel mines.
“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,” said Paul Gait, senior analyst for Wall Street brokerage Bernstein Research.
“Moreover, it would create the biggest and most diversified mining company on the planet. It would be a Glencore-Rio combination that would quickly become the ‘most own’ stock for anyone looking for mining exposure.”
With Glasenberg at the helm, anything is possible.
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