Teck rejects $23 billion Glencore bid, shares rally

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Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) said Monday it has rejected an unsolicited $23 billion takeover bid from Swiss metals trading giant Glencore Plc.

“The board is not contemplating a sale of the company at this time,’’ Teck said in a press release Monday. “We believe that our planned separation creates a great spectrum of opportunities to maximize value for Teck shareholders,’’ said Teck Chair of the Board Sheila Murray.

“The Special Committee of the Board remain confident that the proposed separation into Teck Metals and Elk Valley Resources (EVR) is in the best interests of Teck and all of its shareholders, is a much more compelling transaction and doe not limit our optionality going forward,” Murray said.

The unsolicited proposal contemplates an all-share acquisition of Teck by Glencore offering 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck Class A common share, which represents a 20% premium for both on the date of the offer.

Teck’s Class B common shares rallied on the news, rising 15.4% or $7.58 to $56.93 on volume of 1.42 million. The shares trade in a 52-week range of $62.38 and $32.68.

Under the proposal, Glencore would demerge the 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 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 ESG commitments and would transfer significant value to Glencore at the expense of Teck shareholders,” said Teck CEO Jonathan Price.

Teck ranks as the world’s second-largest seaborne exporter of steelmaking coal, with six operations in Western Canada and significant steelmaking coal reserves. They include Elkview, Fording River, Greenhills and Line Creek in southeastern British Columbia.

News of the takeover bid comes after Teck recently made a series of announcements, including the spin out of its metallurgical its metallurgical coal operations as well as a sunset period for its dual class share structure.

Under the plan, Teck said it will reorganize its business to separate into two independent, publicly-listed companies. Teck Metals Corp. will contain the metal operations while Elk Valley Resources Ltd. (EVR) focuses on steelmaking coal production.

The separation is structured as a spin-off of Teck’s steelmaking coal business by way of a distribution of EVR common shares to Teck shareholders. As part of the separation, Teck will change its name to Teck Metals Corp.

Teck has also announced a proposed six-year sunset for the multiple voting rights attached to its Class A common shares. “The sunset on the multiple voting rights will modernize Teck’s governance and provide a simplified and competitive capital structure, following an appropriate continuity period, which we believe will benefit Teck and all its shareholders,’’ said Murray, Chair of the Board.

Teck said it continues to recommend that shareholders vote in favour of the coal business spinout and the dual class amendment at its annual meeting on April 26, 2023.

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