Glencore raises prospect of improved Teck bid
Glencore Plc has raised the prospect of improving its $23 billion bid to acquire Canadian metals giant Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE).
In an open letter to Teck’s Class B shareholders, the Swiss metals trading company said it has never stated that its proposal is “best and final” and that it is not willing to make changes and improvements to its proposal.
“Glencore believes that any such improvements are best considered following engagement by the Teck board which would allow the parties to jointly explore ways that Glencore could alter its proposal to address any issues raised by Teck management and Teck’s board,’’ the company said in a letter signed by Glencore CEO Gary Nagle.
Under its takeover proposal, Glencore would demerge Teck’s combined thermal and metallurgical coal business (along with ferro-alloys) into a new company. The remaining company could include Glencore and Teck’s base metals operations as well as Glencore’s commodity trading business.
The open letter from Glencore has emerged after Teck’s controlling shareholder and Chairman Emeritus Norman Keevil said Glencore’s takeover proposal was “the wrong one, as well as at the wrong time.’’
Keevil released the statement on April 16, 2023, days after his company rejected the unsolicited takeover bid from Glencore, which the Swiss company has revised to allow shareholders who do not want to own shares in a combined coal operation to receive cash plus 24% of the combined metals-focused business.
Keevil has said Teck’s pending separation into two independent, publicly-listed companies that will contain the company’s metal and steelmaking coal operations provides a greater set of options to maximize value, while minimizing execution risk.
Teck shareholders are set to vote on the planned spin off of the British Columbia coal operations in April 26, 2023.
However, Glencore affirmed that its proposal will stand and remain valid if Teck delays its shareholders meeting or Teck shareholders vote down the proposed Teck separation on April 26, 2023.
“Glencore is willing to make an offer directly to Teck shareholders if the proposed Teck separation does not proceed and Glencore believes that this is required where there continues to be no engagement from the Teck board,’’ the Swiss company said.
It also noted in the letter that two major proxy advisors – ISS and Glass Lewis – have both released recommendations advising Teck shareholders to vote against the Teck separation.
According to a Globe and Mail report, Teck has been approached by Vale [VALE-NYSE], Anglo American [AAL-LON], and Freeport McMoran [FCX-NYSE] on potential deals for the Canadian miner’s base metals business if shareholders approve the planned split.
On April 19, 2023, Teck’s Class B common shares closed at $64.21 and currently trade in a 52-week range of and currently trade in a 52-week range of $66.04 and $32.68.