Teck’s top shareholder backs Glencore takeover
Teck Resources’ (TSX: TECK.A, TECK.B)(NYSE:TECK) top shareholder, China Investment Corp (CIC), said on Friday it plans to back Glencore’s (LON:GLEN) proposed takeover of Canada’s largest diversified miner.
China’s sovereign wealth fund favours the deal because it allows for a cleaner exit for investors, Bloomberg reported on Friday.
CIC holds slightly over 10% of Teck’s Class B shares, which puts it in a powerful position as the Vancouver-based miners needs to secure two-thirds approval from both classes of shares, voting separately.
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 miner has repeatedly rejected Glencore’s proposal to merge the companies and subsequently spin off their combined thermal and steelmaking coal businesses. It says the move would expose shareholders to a larger thermal coal and oil portfolio.
The company is urging investors instead to back Teck’s own restructuring proposal, which it modified on Thursday to allow for an earlier full separation of its metals and coal divisions.
Read More: Teck Resources calls Glencore bid a “non-starter”
Teck’s shareholders are quite divided. The miner’s controlling Keevil family has said through Norman Keevil, who holds the role of chairman emeritus, that now was “not the time to explore a transaction of this nature.”
He already has the support of key stakeholders, including gold magnate Pierre Lassonde, who is planning to buy a stake in Teck’s spinoff coal company to protect it from a foreign takeover.
Egerton Capital UK, the seventh-largest holder of Teck’s class B shares, has said that splitting Teck into two autonomous companies was “much more attractive to prospective buyers” than a takeover by Glencore.
Nippon Steel, which has agreed to buy 10% of Teck’s coal spin-off, said on Thursday it hoped the current restructuring plan would be approved.
Major advisory firm Institutional Shareholder Services, however, urged Teck shareholders on Thursday to reject the company’s move, citing “uncertainties and structural issues associated with the proposal.”
Canaccord’s mining analyst Dalton Baretto believes the upcoming shareholder vote could result in an unwelcome surprise for Teck. “With ISS recommending against Teck’s proposal and a potentially higher bid from Glencore possible ahead of the vote, Teck’s proposed separation is significantly at risk,” Baretto wrote in a note to clients.
Teck chief executive officer Jonathan Price and Glencore CEO Gary Nagle are meeting with top shareholders in Toronto in an attempt to shore up shareholder support for their companies’ own competing visions of the future of the Canadian miner.
Teck investors will decide on the Canadian miner’s restructuring plan on April 26.
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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4 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.
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.
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.
Again, I urge all my fellow class B shareholders to vote against every resolution on the proxy.
Bob Hall
Disclosure – I am a small investor so there is not millions at stake. I have always been proud of my ownership stake in Canadian miners. This move by Glencore fits their past SOP. Throw money. Domcile of the company does not matter. Keevill will kill this deal because he can. Having a Chinese shareholder supporting a take over should flash red lights all over. Take care of company business and then worry about ownership issues. I would like to see a move to limit (lower) Chinese and Russian ownership of shares in any Canadian resourse company.
John Q Public
CIC should sell their stake in Teck on the open market. There is a chance that CIC wants to J/V Teck’s Cu. assets with Glencore. What will happen to the Zn division, The Trail Smelter w/ indium,germanium,cadmium, Au. Ag.?
Glencore is a poor corporate citizen ,based on past history. CIC as a government entity isnt much better.
Leave Teck as a Canadian company.
Bob Hall
If China wants it – guarenteed it is not in Canadas interest.