FINANCE
2014 WAS SUPPOSED to be the year of mergers and acquisitions for the mining industry . Instead , it was the year of deals that never were .
Glencore sent shockwaves through the mining world last year when the commodities conglomerate confirmed it had approached Rio Tinto Group about a possible merger . Ultimately , Rio Tinto shot down the proposal which would have created an industry giant with a combined market value in the range of $ 150 billion .
A similar conclusion occurred with Newmont Mining and Barrick Gold . In April , the two companies had mutually agreed to terms on a blockbuster deal that would have been the largest merger the gold mining industry had ever seen . Clashing personalities , however , caused the deal to eventually collapse .
“ Some of the biggest deals , which created the most excitement and confidence , were the ones that also created the most disappointment when they failed ,” said Robert Leitão , head of global financial advisory at Rothschild .
“ There is a huge gap between the column inches and the number of completions ”.
Because mergers and acquisitions are the bloodsport of the corporate world , we examine the two potential deals that will turn 2015 into the year of mega mergers .
Rio Tinto & Glencore It was heralded as the deal of the century . Rival mining companies Glencore PLC and Rio Tinto merging together to form the world ’ s biggest publicly traded mining company , dislodging BHP Billiton as the top .
“ 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 .”
The two would have formed a powerhouse , marrying Glencore ’ s commodities-trading strengths with Rio Tinto ’ s substantial
20 M arch 2015