Glencore and Rio Tinto‘s merger is facing challenges as Australia’s treasurer rejected the proposal citing concerns about loss of tax revenue for the country.
Australian Treasurer Joe Hockey said he would not allow Glencore’s proposed takeover of the country’s second largest mining company Rio Tinto, which is one of its biggest taxpayers, Reuters reported quoting a source.
In July 2014, Glencore contacted Rio Tinto regarding a potential merger that would have created a $160bn mining and commodities trading major.
After consultation with its financial and legal advisers, the company concluded that a combination was not in the best interests of its shareholders.
In early August, the board’s rejection of the deal was communicated to Glencore and Rio Tinto said it remains focused on the successful execution of its strategy.
The company said in October that it had rebuffed the approach, but Glencore now has the choice to make a new bid, following a six-month breather, as per UK takeover rules.
Previously this year, Rio Tinto chief executive Sam Walsh said there was no value in Glencore for shareholders and regulators and the company would never be acquired by it, the news agency reported.
Glencore is said to have approached Rio Tinto due to its quality, low-cost iron ore resources.
London Capital Group dealer Lewis Sturdy said: "Glencore can turn its attention back on Rio Tinto next week when the six month stand-off expires since its last rebuffed approach.
"Investor focus for now is on a Glencore-Russneft deal which will need Russia Government commission approval. Glencore has one more week left to be bound by the UK takeover panel-imposed six month hold on making a fresh approach for Rio."