White Gold grows Yukon resources
The resource is "one of the highest-grade open-pit gold resources in Canada owned by an exploration company," its CEO says.
Teck Resources (TSX: TECK.A, TECK.B)(NYSE:TECK) urged investors on Monday to support its plan for splitting into two companies at a vote later this month, adding that Glencore’s (LON: GLEN) proposed takeover was a structurally flawed deal and “a complete non-starter.”
Chief executive Jonathan Price, who took the company’s top job in September, said in a conference call that being acquired by Glencore would end up destroying value for the company’s shareholders.
“This is not just about price,” the CEO said on Monday. “We also see serious structural flaws in the proposal that Glencore has put forward, and we believe that (it) would destroy value for Teck shareholders, and that it has significant execution risks.”
The Swiss miner and commodities trader has proposed buying Canada’s largest diversified miner at a 20% premium to its market value. If Teck were to accept the $23 billion deal, Glencore plans to subsequently separate itself into two companies, with one unit holding assets in thermal and metallurgical coal, along with its oil assets. The other would be made up of its base-metals portfolio.
“The modest implied premium in the Glencore-rejected proposal is an illusion,” Price said. “Scale and diversification do not create value if the quality of the business is contaminated.”
In an investor presentation published ahead of the conference call, Teck said the move would expose its shareholders to a larger thermal coal and oil trading portfolio, which is something many investors are trying to avoid in light of the global push to reach net zero emissions by 2050.
Simultaneously, the deal would reduce the Vancouver-based miner’s shareholders exposure to copper and expose them to significant jurisdictional, ESG [environmental, social and corporate governance] and execution risks, it said.
This makes Glencore an “unsuitable acquirer” because of the risks involved in its business, Teck said.
In a move to block Glencore’s approach, Canadian gold magnate Pierre Lassonde is planning to buy a stake in Teck’s spinoff coal company to protect it from a foreign takeover, The Globe and Mail reported Friday.
Lassonde’s strategy backs the position of Teck’s controlling shareholder Norman Keevil, who has said he will not sell to a foreign company at any price.
With about two weeks until the April 26 vote, Teck and Glencore each have a tight deadline to win over the Canadian miner’s investors.
Teck operates under dual-class structure in which the family of octogenarian mining magnate Norman Keevil owns the majority of class A “supervoting” shares, each worth 100 votes. The class B shares are worth one vote each.
The business split requires two-thirds support from both from both class A and class B shares, meaning that investors with a small percentage of the total voting rights could have the power to sink the company’s vision.
If Glencore ends up acquiring Teck, the deal would go down in history as one of the world’s biggest-ever mining takeovers.
Comments
Steve
I own some class B shares of TECK. On April 7 I received a proxy form from TECK along with a book approximately 240 pages long explaining two resolutions in the proxy ballot. One resolution is called the Dual Class Resolution Amendment. The other is called the Separation Plan of Arrangement.
I first became interested in TECK in 1980. Since then I have followed TECK intermittently. TECK has a dual system on their common shares, class A and class B. The two classes are the same except that a class A share has 10 times the voting rights of a class B share. When the class B shares were created they were given the guarantee that in the event of a takeover each class B share would receive the same compensation as a class A share.
The Dual Class Resolution is an attempt to convert each class A share into 1.67 class B shares. In order for this resolution to pass it must receive the votes of 2/3 of the class A shares voting and the votes of 2/3 of the shares of the class B shares voting. I urge all class B shareholders to vote no for the Dual Class Resolution.
The Separation Plan of Arrangement splits TECK into two companies. However in the maze of details concerning the split it works out that the stock options held by class A shareholders are far more valuable than if the options were for class B stock. I urge every class B shareholder to vote against the Separation Plan of Arrangement.
In conclusion, the plan to convert the class A shares to class B shares and the plan to split TECK into two companies are designed to have the class A shareholders receive more compensation per share than the class B shareholders. I urge all class B shareholders to vote against every resolution on the proxy.