Merger talks between Rio Tinto and Glencore are running up against a February 5 deadline, with an extension now looking increasingly likely.
As reported by The Australian Financial Review, an extension is considered the most likely scenario. Under UK takeover regulations, Rio must either make a firm offer, walk away, or seek approval from the panel on takeovers and mergers to prolong discussions.
Industry insiders told the AFR that progress in the talks has been uneven, with periods of intense activity followed by slow movement.
While an extension would indicate that Rio has not found any deal-breaking issues, it does not guarantee the merger will go ahead. Although previous large-scale negotiations, such as BHP and Anglo American were extended only to end later on.
Adding another layer to the talks, Reuters reported that Glencore is close to appointing Citi as its lead investment bank. Citigroup has filed disclosures with the UK Takeover Panel confirming its advisory role in connection with a potential Rio Tinto offer. Both Citi and Glencore have yet to comment on the reports.
Rio Tinto is also working with JP Morgan, Evercore and Macquarie, with advisory roles on a deal of this scale expected to generate more than $100 million in fees.
AFR points to Glencore’s copper development pipeline as a strategic draw for Rio, especially amid growing demand for metals critical to electrification and renewable energy.
With the February 5 deadline looming, everyone is watching closely to see whether Rio and Glencore will secure a deal or an extension, otherwise the clock will run out on one of the mining industry’s most ambitious mergers.