A leading Australian shareholder in Rio Tinto has issued a stark warning to the mining giant's leadership, criticising the lack of detail around a potential $300 billion combination with Glencore and insisting no premium should be paid for the deal to proceed.
Shareholder demands clarity on 'significant transaction'
The rebuke came from Wilson Asset Management (WAM) portfolio manager John Ayoub, who told The West Australian that Rio's announcement on Friday, January 9, 2026, about preliminary talks left investors wanting. "One thing that's clear is that there's a lack of information," Mr Ayoub stated. He encouraged both companies to release more details, emphasising the need to understand the mechanics behind such a monumental proposal.
Mr Ayoub argued that the distinction between a merger and a takeover is critical for shareholder value. "Whether or not this a true merger with no premium makes a lot of difference as to how it is viewed," he said. The market reaction on Friday morning seemed to anticipate a premium, with Rio's ASX-listed shares falling more than 5 per cent.
'This needs to be a merger, not a takeover'
John Ayoub laid out the potential benefits for both sets of shareholders but drew a firm line on valuation. He noted that Glencore shareholders would gain access to Rio's world-class assets, including the cash-generating Pilbara iron ore operations. In return, Rio shareholders would benefit from synergies and Glencore's renowned trading and marketing expertise.
However, he was unequivocal on the financial terms: "But this needs to be a merger, not a takeover. No premium can be paid whatsoever or else the deal doesn't make sense for Rio shareholders." WAM is one of Rio's largest Australian-based shareholders, with its $1.9 billion WAM Leaders fund holding over $100 million in Rio stock, making it the fund's largest position.
Simon Trott's 'first test' on capital discipline
The pursuit of Glencore represents the most significant challenge yet for Rio Tinto's Chief Executive, Simon Trott. Mr Trott has championed prudent capital management since taking the top job last year. Mr Ayoub framed the potential deal as the ultimate test of that commitment.
"Rio's leadership and their board... came out not too long ago telling us they will be disciplined on capital allocation. Well, guess what? This is your first test," Mr Ayoub declared. He called on the CEO and board to demonstrate the discipline they promised, ensuring the deal delivers an economic return without jeopardising Rio's existing growth platform.
Reiterating his core demand, the portfolio manager concluded, "So again, I'll stress this needs to be a merger, opposed to a takeover." The comments set the stage for intense scrutiny as one of the mining sector's most ambitious potential deals begins to take shape.
