Global miner Rio Tinto has confirmed that resources group Glencore has approached it about a merger but says it’s rejected the offer.
The approach was made in July.
Such a merger would create the world’s largest mining company.
Rio Tinto said, in a statement on Tuesday, that its board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of its shareholders.
“The Rio Tinto board confirms that no discussions are taking place with Glencore,” the statement said.
“The board’s rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter.
“Rio Tinto remains focused on the successful execution of its strategy, which the board of Rio Tinto is confident will continue to deliver significant and sustainable value for shareholders.”
Rio Tinto chairman Jan du Plessis said that “under the leadership of Sam Walsh and Chris Lynch, Rio Tinto has made significant progress in refocusing and strengthening its business”.
““The board believes that the continued successful execution of Rio Tinto’s strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders,” du Plessis said.
“Rio Tinto’s shareholders stand to benefit from the very considerable value that this will generate.”
Glencore’s proposal would have created a company valued at about $US160 billion (A$173 billion).
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In earlier speculation Bloomberg reported that Glencore has run the idea past Rio Tinto’s biggest shareholder Chinalco to gauge its interest in a potential deal.
The reports come after the price for iron ore recently hit five-year lows and rival miner BHP Billiton Limited launched its latest round of cost cutting measures.
Rio Tinto reported a net profit of $4.54 billion in the first half of the 2014 calendar year.
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