Is Rio Tinto a takeover target

Is Rio Tinto a takeover target? Commodity trader and miner, Glencore, offered to merge with Rio to form a US$160bn colossus that would overtake BHP to become the world's largest miner. Rio has spurred the offer but it does highlight that the dramatic fall in iron ore prices has created a perception of vulnerability. The perception is false. Even after dramatic falls, Rio should still generate operating margins of 50% and return on assets of about 40% from iron ore. No other miner can match its resource base, low costs and logistical nous. It's easy to see why Glencore would want the business, it's harder to understand why Rio would sell without an astronomical price tag. (VIEW LINK)