LONDON, Oct 6 (Reuters) - Rio Tinto’s American Depositary Receipts (ADRs) surged in New York on Monday, after Bloomberg News reported after the European market close that rival miner Glencore was laying the groundwork for a potential merger with Rio.
Rio Tinto’s ADRs were up by 7.1 percent. Rio’s London-listed shares had earlier closed up by 1.6 percent, while Glencore’s London-listed shares had ended 2 percent higher.
Spokesmen for both Rio Tinto and Glencore said their companies did not comment on market speculation.
“It doesn’t surprise me that they want to consolidate their positions further by creating a merger which will secure them as a dominant player in the sector during a period when commodity prices are going to remain probably quite soft,” Lorne Baring, managing director of B Capital Wealth Management, said.
The FTSE 350 Mining Index, which includes both Rio Tinto and Glencore, has fallen by around 16 percent since the start of 2014, as the sector has been hit by worries about a Chinese economic slowdown and a drop in iron ore prices.
“Even if share prices do get depressed in the sector, there will always be takeover speculation in the background that will prop up the sector’s stocks,” said Cavendish Asset Management fund manager Paul Mumford. (Reporting by Sudip Kar-Gupta; Editing by Atul Prakash)