Glencore’s $22.5 Billion Merger Offer Is Rejected By Teck Resources In Canada

(CTN News) – TECK Resources (TECKb.TO) rejected a $22.5 billion bid from London-listed miner Glencore on Monday, boosting its Toronto Stock Exchange shares by 16%.

Glencore and Teck have previously discussed the possibility of a spin-off and merger of their coal businesses, which are both listed on the New York Stock Exchange. During 2020, informal discussions broke down without agreement.

If Teck merges with another company, it would be exposed to large thermal coal businesses, unwelcome oil trading businesses, and significant jurisdictional risks, all of which could negatively affect its stock price.

Chair Sheila Murray told Glencore’s board that the Teck board is not considering selling the company at this time.

A 20% premium was offered by Glencore over the closing stock price of Teck on March 26, when the bid was made. As part of the proposal, the companies’ thermal and steelmaking coal businesses would be spun off simultaneously.

An earlier this year restructuring plan from Teck would see the Vancouver-based miner spin off its steelmaking coal unit to focus on industrial metals, such as copper, in an effort to increase shareholder value. April 26 is the date for a vote on this proposal.

Teck Metals Corp will be rebranded as Teck Metals Corp after the separation, while Elk Valley Resources Ltd. will be listed in Toronto.

In a statement, Scotiabank analysts said the Glencore offer is an opportunistic bid designed to take advantage of the current dislocation in Teck shares.

In light of the Keevil family’s control over Teck’s A shares, the chances of a successful transaction with Glencore are extremely low, they added.

There was a 2.6% decline in Glencore’s London-listed shares.

As the Keevil family owns the majority of Teck’s ‘A’ class shares, which are more powerful than ‘B’ class shares owned by institutions, any merger discussion may be difficult.

In a statement, Norman Keevil, chairman emeritus of Teck Resources, said, “I unequivocally support the Board’s decision to reject Glencore’s unsolicited offer.”

I have the utmost confidence in the Board’s and our management team’s strategy to maximize shareholder value after separation.

A TAKEOVER IS NOT AN OPTION

As part of his presentation to shareholders, Glencore CEO Gary Nagle said a merged metals company called GlenTeck, which would be listed in London, would be capable of producing approximately 3 million tonnes of copper per year.

Companies searching for minerals for the energy transition have been looking for assets that produce copper for use in batteries and charging stations for electric vehicles.

As a result of investor feedback and the appetite for such a company in New York, Nagle said the merged coal company would be listed primarily there.

Also, Nagle noted that Glencore does not anticipate major antitrust issues and that there is no possibility of a sweetener since “this is not a takeover.”

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