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Rio Tinto and Glencore have abandoned plans for a $260bn megamerger that would have created the world’s largest mining group.
Rio said in a statement on Thursday that it had “determined that it could not reach an agreement that would deliver value to its shareholders”.
The announcement marks the end of more than 18 months of on-again, off-again discussions between the two companies.
One person close to the conversations said “the gap was too big”, while another added that the talks went down to the wire.
The FT reported on Wednesday that significant differences remained between the two sides on valuation and on governance issues.
Glencore said in a statement that it had bridled against both Rio’s demands to retain its chair and chief executive as heads of the combined company, and that Rio’s offer “significantly undervalued Glencore’s underlying relative value”, including not properly valuing its copper business.
Shares in Glencore fell 10.1 per cent to 459.35p in late afternoon London trading.
The two companies had confirmed they were in deal talks in early January, and had a deadline of February 5 to “put up or shut up” — the date by which Rio had to either make a firm offer or walk away from the deal, unless both sides decided to extend talks. They will now have to shelve any merger discussions for six months.
Rio’s decision to drop the deal talks is the latest in a series of failed megamergers in the mining industry, including BHP’s multiple unsuccessful bids for Anglo American.
This is a developing story.