CreditSights questions cultural match between Rio Tinto, Glencore amid rumoured merger
Fitch Solutions company CreditSights says a rumoured merger between major diversified miners Rio Tinto and Glencore could result in a $126-billion company.
However, the rumoured merger raises questions about strategic alignment and corporate culture owing to Rio Tinto’s lack of interest in coal assets and Rio Rinto being considered as a conservative and stable company, whereas Glencore is known for its aggressive approach and pushing the envelope in its operations, CreditSights notes.
“This cultural divide may pose challenges in integration and decision-making if a merger were to proceed,” the firm states.
It points out that Rio Tinto might be interested in Glencore’s copper assets, which aligns with its own focus on sustainable future-facing metals, while Glencore’s marketing business could offer synergies with those of Rio Tinto and expand its reach.
Further, CreditSights explains that larger mergers in the metals and mining sector are typically executed as all-equity transactions, which could mitigate financial strain and maintain balance sheet strength.
For Glencore, merging with larger credit with a higher rating would be credit-positive. For Rio Tinto, an all-equity transaction will not have a material impact on its credit.
CreditSights concludes that a merger between Glencore and Rio Tinto may have implications for mega deals in the mining and metals sector, potentially putting more major mergers back in play, such as BHP’s failed attempt to acquire Anglo American.
Newswire Bloomberg has reported that Glencore and Rio Tinto held discussions on the proposed merger last year but that there were no firm plans for any transaction between the two entities yet.
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