This week we learned that commodities trader and mining giant Glencore approached iron ore and copper miner Rio Tinto about a merger in the summer, and was rebuffed.
UK takeover rules prevent the two from having new talks for six months, but Glencore is still keen on further deals after buying Xstrata last year.
A tie-up would create the world's biggest mining group, with a market value of £100bn. The combined entity would make up 10% of the FTSE 100.
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What the commentators said
You can see why Ivan Glasenberg, Glencore's chief executive, is keen on a merger, said Alistair Osborne in The Times. Glencore has coal, copper and zinc mines to back its commodities trading book, but it has no physical presence in iron ore.
Rio also boasts "world-class mines, feeding China from politically stable Australia", and little debt, so Glencore's credit rating would get a boost. Glasenberg's track record suggests we haven't heard the last of the deal, said James Moore in The Independent.
"You don't pull off mega-deals like the £39.1bn takeover of Xstrata, ousting its chief executive in the process, without a keen strategic mind and a willingness to play the long game."
Yet it's hard to see the appeal for Rio, said Nils Pratley in The Guardian. Given Glencore's high debts, any offer is likely to be funded in Glencore shares, and these are hardly must-haves: they are down by 35% since listing in 2011.
Sure, the price of iron ore has hit a five-year low of $80 a tonne but Rio still makes a healthy 44% margin on its main product, as it only costs $45 a tonne to dig it up and ship to China. If prices fall further, cutting production and spending would help shore them up. So there's no need to seek shelter with Glencore.
A huge takeover premium would override this, but "Glasenberg doesn't do big premiums". In sum, Rio doesn't need Glencore, and Glencore would have trouble offering appealing terms.
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