Teck Resources calls Glencore bid a “non-starter”

Highland Valley Copper operations, British Columbia, Canada. (Image courtesy of Teck’s sustainability report 2022.)

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 Mining Magnate Stands Between Glencore and Mega Deal


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.

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