Glencore’s long hunt for Rio Tinto’s coal mines slips away

Bloomberg

Glencore Plc’s years-long pursuit for a bigger Australian coal business was delivered another setback after Rio Tinto Group passed on the company’s offer for a second time.
Now the mining giant run by a former coal trader is running out of time to come back with a better offer or lose out on a deal the company has chased since at least 2013. The mines are situated near Glencore’s own operations in the Hunter Valley, and the ability to work them together makes them an attractive prize.
“They wanted these assets for a long time,” said Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London. “Never say never, but they will be disappointed if they ultimately go to Yancoal.”
Rio stuck with Yancoal Australia Ltd. for the operations in New South Wales because of the likelihood of a speedier completion, despite two last-minute bids from Glencore. Rio shareholders will meet in London on Tuesday and Australia on Thursday to approve the deal, giving Glencore little time to counter.
“At the moment it looks as though they are on the back foot,” Glyn Lawcock, a resources analyst at UBS Group AG in Sydney, said on Tuesday. A spokesman for Glencore declined to comment on the deal.
“This sale process has been in progress for a
long period of time and we believe it is in the best interests of our shareholders to take the greater certainty of Yancoal’s strong proposal,” Rio’s Chief
Executive Officer Jean-Sebastien Jacques said in a statement.The two offers:
Glencore: $2.68 billion in cash, plus a coal-price linked royalty. The company also agreed to compensate for regulatory delays and pay a $225 million deposit, which would be forfeited if the deal doesn’t win regulatory approval. Yancoal: $2.45 billion cash, $240 million in royalty payments and an increased break fee.