Teck Resources rejects Glencore’s merger offer

CANADIAN mining giant Teck Resources early this week unanimously rejected an unsolicited and opportunistic acquisition proposal from Glencore Plc.

This follows Glencore announcing its proposal for a merger between Glencore and Teck.

Glencore submitted a proposal to the board of directors of Teck Resources – on 26 March – to merge with Teck and to simultaneously demerge their combined metals and coal businesses.

Teck describes itself as among Canada’s leading mining companies, and says it is committed to responsible mining and mineral development, with major business units focused on copper, zinc and steelmaking coal.

The offer is the largest acquisition attempt by the largest coal miner since its merger with Xstrata in 2013.

Teck said if the acquisition had happened, it would have exposed its shareholders to thermal coal and oil trading.

The unsolicited offer comes after Teck announced plans to separate its steelmaking coal business from a portfolio of minerals vital to the energy transition.

Teck chairman Sheila Murray said: “The board is not contemplating a sale of the company at this time. We believe that our planned separation creates a greater spectrum of opportunities to maximise value for Teck shareholders.

“The special committee and board remain confident that the proposed separation into Teck Metals and Elk Valley Resources is in the best interests of Teck and all its stakeholders, is a much more compelling transaction, and does not limit our optionality going forward.”

Teck chief executive Jonathan Price said: “The Glencore proposal would expose Teck shareholders to a large thermal coal business, an oil trading business and significant jurisdictional risk, all of which would negatively impact the value potential of Teck’s business, is contrary to our environmental, social and governance commitments and would transfer significant value to Glencore at the expense of Teck shareholders.”

The group said consistent with its fiduciary duties and in consultation with its financial and legal advisers, Teck’s board of directors conducted a detailed review and assessment of the unsolicited proposal and, on the recommendation of the independent special committee of the board, has determined the proposal is not in the best interests of Teck or its shareholders.

“The board strongly believes the separation plan that Teck has proposed, which will create two world-class Canadian companies, provides a superior opportunity to maximise value for all Teck shareholders. Furthermore, the unsolicited proposal introduces significant timing, regulatory and other execution risks, particularly as compared to Teck’s own planned separation,” the group said.

In its proposal, Glencore suggested a separate company, MetalsCo, which would include Glencore and Teck’s industrial metals businesses, as well as the London-listed company’s oil trading division.

“The unsolicited proposal is an opportunistically timed attempt to transfer value to Glencore shareholders at the expense of Teck shareholders. It comes as Teck is ramping up its flagship QB2 copper project,” the group said.

– IOL News