Hedge Funds Told To Expect Glencore-Rio Merger

Nov 25 2014 | 1:23pm ET

It may not look promising, but the union of Glencore and Rio Tinto Group is all but certain, a group of hedge funds has been told.

Ian Hannam, a former JPMorgan Chase banker now running his own mergers and acquisitions boutique, convened a number of prominent funds earlier this month to press his thesis. According to Bloomberg News, Hannam appears to be angling for a role in a deal he says is inevitable.

“If not today, this deal will happen sometime in the near future,” Hannam told the hedge funds, including GLG Partners, D.E. Shaw Group and Pentwater Capital Management. “Glencore is M&A savvy and times deals well. The combination will create a super-major with a diversified portfolio of world-class mining assets.”

Hannam’s certainty comes in spite of Glencore’s insistence last month that it was “no longer actively considering any possible” deal for Rio, which rejected a $160 billion offer this summer. In addition, under British law, Glencore will have to wait until at least April to make another bid.

Even Hannam acknowledged “headwinds,” noting that Rio shareholders “will demand a material premium” and questioning Glencore’s debt level and the willingness of regulators to approve the deal.

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