GLENCORE PLC - Response to Rule 2.8 announcement from Rio Tinto

Evidence from the filing

• Management demonstrated disciplined capital allocation by rejecting a proposal that undervalued Glencore's relative contribution and copper growth pipeline.

  “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 contribution to the combined group, even before consideration of a suitable acquisition control premium.”

• The company has achieved high operational reliability, meeting full-year production guidance for two consecutive years.

  “We have optimised and simplified our operating structures, which has promoted accountability and delivery, and supported our achieving, for the second consecutive year, full year production for our key commodities within guidance ranges.”

• Glencore possesses a clear growth trajectory to become a global leader in copper production over the next ten years.

  “We have continued to upgrade the quality of our portfolio of assets, have invested strategically in new opportunities, and now have an exceptional portfolio of copper projects, which provides a pathway from an already significant copper producer, to become one of the world's largest producers over the next decade.”

• The group maintains a strong competitive advantage through its integrated business model, combining a diverse commodity portfolio with a leading marketing franchise.

  “Glencore's standalone investment case is strong. We have a well-diversified business across a range of commodities, supported by one of the best marketing franchises in the industry.”

• The collapse of talks eliminates the possibility of an immediate acquisition control premium for shareholders.

  “The Board of Glencore notes the announcement made by Rio Tinto plc and Rio Tinto Limited (together, "Rio Tinto") earlier today confirming that it does not intend to make an offer for Glencore.”

• The proposed terms, which would have seen Rio Tinto retain both the Chairman and CEO roles, suggest a loss of strategic influence for Glencore in any potential combination.

  “The key terms of the potential offer were Rio Tinto retaining both the Chairman and Chief Executive Officer roles”

• Glencore management admits to a significant disagreement on the valuation of its core copper business and growth pipeline, which failed to meet Rio Tinto's offer criteria.

  “It does not reflect our view on long term, through the cycle relative value, including not adequately valuing our copper business, and its leading growth pipeline, and apportioning material synergy value potential.”

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