Glencore near appointing Citi for Rio Tinto merger discussions, sources claim

• The combined entity would be worth over $200 billion, making it the world's largest miner
• Citi has a longstanding relationship with Glencore, having advised on its 2011 IPO and recent Teck Resources coal business buyout
• Rio Tinto has reportedly appointed JP Morgan, Evercore and Macquarie as advisors, while other banks are competing for roles on Glencore's side

Summary

Swiss miner Glencore is nearing the appointment of Citigroup as its lead investment bank for a potential merger with Rio Tinto, which would create the world's largest mining company valued at over $200 billion. Citigroup Global Markets filed disclosures with the UK Takeover Panel in January, confirming its connection to Glencore regarding the possible transaction.

Citi has a longstanding relationship with Glencore, having advised on its 2011 IPO and the recent acquisition of Teck Resources' coal business. The bank declined to comment on the current engagement.

Key Timeline: Under UK takeover rules, Glencore has until February 5 to announce a firm offer or withdraw, following the January 8 disclosure of early merger discussions. However, market observers anticipate the deadline may be extended due to the deal's scale and complexity.

Deal Structure: Multiple banks are competing for advisory roles on this high-profile transaction. Rio Tinto has reportedly engaged JP Morgan, Evercore, and Macquarie as advisors. Investment banking fees for deals of this magnitude are highly lucrative, making advisory positions particularly competitive.

Market Implications: The potential merger would consolidate significant mining resources and create unprecedented scale in the global mining sector. The combination would reshape the competitive landscape for commodities including iron ore, copper, and coal. The deal's complexity, involving regulatory approvals across multiple jurisdictions and potential antitrust concerns, suggests a lengthy approval process if the merger proceeds.

Both companies and their advisors declined official comment on the developing situation.