Teck Resources (TSX: TECK.A, TECK.B)(NYSE: TECK) is said to have been approached by Vale (NYSE: VALE), Anglo American (LON: AAL) and Freeport-McMoRan (NYSE: FCX) on potential deals for the Canadian miner’s base metals business if shareholders approve a planned split.
The three global miners are among at least six companies that have expressed interest in transactions with Teck post-split, local paper The Globe and Mail reported on Sunday, citing sources close to the matter.
The Vancouver-based company, which is Canada’s largest diversified miner, proposed in February spinning off its steelmaking coal business to focus on base metals, particularly copper and zinc.
A few weeks later, Swiss commodities trader and mining company Glencore Plc (LON: GLEN) launched a hostile $23.1 billion takeover bid for Teck, which has since been sweetened to entice Teck’s shareholders initially opposed to the idea of being exposed to a larger coal portfolio.
The revised proposal gives Teck’s shareholders who do not want to own shares in the combined coal operation the option to receive cash plus 24% of the combined metals-focused business.
On Sunday, former chairman Norman Keevil, whose family controls Teck through its ownership of the majority of the company’s ‘A’ class of shares, reiterated his arguments against the takeover.
“As there has been much media commentary regarding my views on the future of Teck, I would like to provide a clear statement of my perspective,” Keevil said in the statement.
“My colleagues and I are proud of what we achieved through 30 years of building Teck, growing the company 500-fold from a $25 million market cap to $12.6 billion, with double-digit compounded growth in shareholder value, and continuing growth in recent years to $25 billion today,” he said.
Keevil clarified he would support a transaction — be it an operating partnership, merger, acquisition, or sale – with the “right partner”, on the “right terms” for Teck Metals after the planned separation.
Teck’s chairman emeritus added that Glencore’s proposal was “the wrong one, at the wrong time” and that the split should go ahead.
With just over a week left on the clock for Teck’s shareholders to vote on the split, Glencore is trying its best to persuade the Canadian miner’s shareholders. Last week, chief executive Gary Nagle landed in Toronto to personally explain his company’s vision and intentions.
By Friday evening, two influential shareholder advisory firms had recommended against Teck’s strategy, while its largest investor, China Investment Corp., was allegedly inclined to favour Glencore’s proposal.
Michael Goehring, president and CEO of the Mining Association of British Columbia (MABC), voiced on Monday his concerns about the eventual takeover of Teck.
“The potential loss of BC’s long-standing mining champion and head office jobs in Vancouver is not in the best interests of British Columbians,” Goehring said. “We should be growing more local head office jobs in Vancouver, anchored by companies like Teck Resources, rather than see them go elsewhere.”
He called on the federal government to review the deal as the future of a “major Canadian critical minerals producer” is on the line.
Experts had anticipated that the company’s decision to split the business in two would make Teck Metals a takeover target. The company owns four copper mines in South America and Canada, which produced 270,000 tonnes combined last year.
Teck also expects to double copper output after the second phase of its Quebrada Blanca (QB) project in Chile ramps up to full capacity by the end of 2023.
Glencore believes that operating Quebrada Blanca jointly with the nearby Collahuasi mine, in which the Swiss multinational holds a 44% stake, would add at least a $1 billion of value to its coffers.
The idea, Glencore has explained, is that QB and Collahuasi share infrastructure rather than creating a single operation. The latter would require approval from Anglo American (LON: AAL), which has 44% of Collahuasi and Sumitomo, which holds a 30% indirect interest in the Chilean copper mine.
Top miners, in turn, are hungry for copper assets as demand for the metal accelerates and a global shortfall looms. BHP, Rio Tinto and Glencore have all disclosed that they are actively looking to grow their copper exposure.
2 Comments
Steve
TECK has two classes of common shares, A and B. The only difference in the two classes is that class A shares have 100 votes each and class B shares have 1 vote each. In the legal document that established the dual share classes it specifically states that in the event of a takeover that class B shares will receive equal compensation to class A shares.
TECK management has proposed that TECK be split into two companies. I have received a proxy statement to vote on several resolutions in an April 26 stockholders’ meeting which are designed to split TECK into a coal mining company and a copper mining company. But far more importantly from class B shareholders’ viewpoint the split would result in class A shares being worth significantly more than class B shares. You can find out more about this topic by reading the TECK “Notice of Meeting and Management Proxy Circular” beginning on page 122. Yahoo does not allow me to post a link to the Circular. You can find the Circular on the TECK web site if you did not receive one in the mail.
If TECK management revises the terms of the split to where the class B shares would receive equal value to the class A shares then I would give serious consideration to voting for the split.
I urge all my fellow class B shareholders to vote against every resolution on the proxy.
Abel Musonda
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