Rio Tinto and Glencore have been engaging in preliminary discussions about a possible all-share merger, which could potentially create a new mega-miner valued at $207 billion.
The companies did not reveal the specific details on the talks. However, they expect that "any merger transaction would be effected through the acquisition of Glencore by Rio Tinto by way of a court-sanctioned scheme of arrangement."
"There can be no certainty that an offer will be made or as to the terms of any such offer, should one be made," Rio said in a statement. "A further announcement will be made in due course as appropriate."
Under UK takeover rules, Rio Tinto has until February 5 to make a formal offer for Glencore, Reuters reported. Rio Tinto, the world's biggest iron ore miner, has a market capitalisation of about $142 billion. Glencore, one of the world's largest base metal producers, is valued at $65 billion.
"The structure of a possible merger between these two companies is unclear and would likely be complex, but we do believe there is a path to significant value creation for both," Jefferies analysts said.
Global mining industry has seen a few major consolidations recently, including Anglo American and Teck Resources deal. The companies have agreed to a merger last year to create a copper-focused industry heavyweight.
Theodor Lisovoy, Managing Editor, Rough&Polished
