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Glencore makes $22.5B offer for Teck
Merger and acquisition activity continues in the North of 60 Mining News area with Glencore's unsolicited US$22.5 billion (C$30.3 billion) all shares offer to merge with Teck Resources Ltd., which owns the Red Dog zinc mine in Alaska and interest in several advanced copper exploration projects in Northern British Columbia.
On April 3, Teck announced that the world's largest mining company offered 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck Class A common share. As proposed, the offer would result in Glencore shareholders owning 76% of the merged company, with Teck shareholders owning the remaining 24%.
While this offer represents a 20% premium for Teck shareholders, the Canada-based mining company's board of directors determined that the proposal from the Swiss mining giant was opportunistic and unanimously voted to reject it.
Glencore, which plans to carry forward Teck's asset separation plan by adding its own assets into the separated companies, contends that the merger would create significant value for Teck shareholders by further diversifying and expanding the portfolios of the metals-focused and coal-focused companies that would result of the merger and then demerger proposal.
Teck has its own plans
Teck first announced a strategy in February to move its steelmaking coal unit into Elk Valley Resources, which would be a world-leading steelmaking coal mining company that would export premium coal mined from Teck's current portfolio in Southern British Columbia.
Nippon Steel Corp., a Japan-based company that already owns a minority interest in Teck's BC coal assets, has agreed to pay Teck C$1 billion in cash for a 10% stake in Elk Valley. South Korea-based POSCO also owns a minority interest in the coal operations, which will be converted into a 2.5% stake in Elk Valley.
"This significant participation by two of the world's largest steelmakers highlights the long-term, critical importance of high-quality steelmaking coal in order to reduce emissions and build essential infrastructure globally," said Teck Resources CEO Jonathan Price.
Teck's portfolio of copper- and zinc-forward metals mining operations would be advanced by Teck Metals, a name that better reflects the new focus of the envisioned growth-oriented and low-cost base metals mining company.
Teck says both companies that emerge from the proposed decoupling of the company's current metals and coal assets would remain committed to strong environmental and social performance.
"We are confident that pursuing this plan will position both businesses for even greater success, allow shareholders to optimize their exposure to the different underlying commodities, and support a sustainable future for the benefit of employees, local communities, and Indigenous peoples," said Teck Resources Chair Sheila Murray.
Glencore has grander vision
In an April 3 statement confirming that it has put in a bid to buy out Teck, Glencore said it plans to carry forward the demerging strategy put in motion by Teck. The demerged metals and coal businesses proposed by the world's largest mining company would look much different than Teck originally had in mind.
Glencore proposes the formation of MetalsCo, the placeholder name for a world-class business that would be primarily focused on the metals needed for the energy transition. This company would hold a diversified portfolio comprising Glencore's and Teck's metals and minerals assets, Glencore's metals and non-coal energy marketing division, recycling businesses, as well as Glencore's investment in Canadian grain handling business Viterra.
Glencore believes that the proposed merger with Teck and then demerger of metals and coal assets is a compelling proposition that would create significant value for both Teck and Glencore shareholders.
Teck's board, however, strongly believes that its independent metals and coal decoupling plan offers the superior opportunity to maximize value for all Teck shareholders.
"Now is not the time to explore a transaction of this nature, and I have the utmost confidence in the board's and our management teams' strategy to maximize value for each of Teck Metals' and EVR's shareholders after the separation," Keevil said of Glencore's proposal.
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- [Editor:邢亚敏]
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