M&A NOTES - What’s Wrong with $260bn?

M&A Valuation Issues Defeat Rio Tinto and Glencore

The bigger they come, the harder they fall.

A proposed merger deal worth $260bn between Rio Tinto and Glencore worth around $260bn just collapsed, on February 6, 2026. What went wrong?

An important issue in M&A deals is valuation. A second issue is whether integration of two established businesses will work.

In the case of Rio Tinto and Glencore, both companies extract minerals and see high demand for new copper mines. Copper is a resource needed for the AI revolution.

However, the Financial Times commented that Rio was keen that its chair and CEO lead the combined entity, while Glencore held out for a 40% stake for its shareholders.

In short – valuation and ego.

These issues are also discussed in the book “M&A This Way!”.

Below are related comments on getting an M&A deal done, big or small.

Public Statement:

Glencore posted a statement that “the parties were unable to reach agreement on the terms of a combination. The key terms of the potential offer were Rio Tinto retaining both the Chairman and Chief Executive Officer roles and delivering a proforma ownership of the combined company which, in our view, significantly undervalued Glencore’s underlying relative value…we remain focused on delivering…organic growth”

Comments:

In our experience, as discussed in the book “M&A This Way several lessons come to mind:

Ego: M&A deals are 10% economic, 10% legal, 10% tax and 70% psychological. Consider what motivates the other side.
Valuation issues: These might be resolved by using an earn-out clause (contingent consideration) or milestones. Example: If I think something is worth 100 and you think it is worth 200, we might agree on 100 plus a share of any income above a certain level, or more consideration if an important milestone is achieved. Think flexibly.
Integration: If leadership of a merged entity cannot be agreed, how will they ever work together?
Building your own business – organic growth – is an alternative to an M&A, but it takes time. Time is a precious commodity.
Deadline: The parties were apparently under regulatory pressure to agree the deal within a month after details leaked to the press. The deal collapsed just two hours before the deadline expired. Deadlines matter.

Concluding remarks:

In this case: we wonder why Rio and Glencore didn’t agree to merge and place a bundle of shares in escrow until an agreed number of new copper mines were opened.
Readers are advised: to review the issues of valuation, motive and regulatory requirements with professional advisors in each country concerned.
For more general M&A information: please read the book “M&A This Way! “available at https://mergeacq.com/ma-book/.
For advice or assistance in specific cases: please email: [email protected]

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M&A NOTES – What’s Wrong with $260bn?