Canada’s Teck Resources rejected a £18 billion offer from Glencore. The company had suggested that their coal operations be combined in a major overhaul.
Teck shares rallied 7.16 percent, or 19.6%, to close at $43.66 in New York after Teck dismissed the idea as “opportunistic”.
Glencore stated that it had presented a “very compelling plan” for investors in both businesses as it reiterated interest. The shares in the FTSE 100 commodities and mining trader fell 12p or 2.6% to 452 1/2 p in London.
Glencore proposed to buy Teck in an all-share deal worth $22.5 billion. Then, the company would divide the business into two companies: a London-listed metals firm with its copper, cobalt and zinc operations and a New York-listed coal-producing company that includes their ferroalloys and coal assets.
Teck claimed that Glencore’s proposal could expose shareholders to oil and thermal coal trading. Sheila Murray (chair of its board), stated that the board does not plan to sell the company. We believe our separation will create more opportunities to maximize value for Teck shareholders.
Glencore is a Swiss-based industrial company that mines coal and other metals. It also has a marketing business that trades a variety of commodities. Its stock market value is £57 billion.
Teck is Canada’s most prominent miner. Its roots can be traced back to 1913 when Teck-Hughes Gold Mines was established to develop a discovery of gold in Teck, Ontario. The Keevil family still controls the company, and yesterday stated that they support the board’s decision to reject Glencore.
Teck announced in February plans to separate its steelmaking and base metals businesses. The proposal will be up for vote by shareholders on April 26. Teck rejected the Glencore plan yesterday. It was a premium of around 20% on Teck’s stock prices. Glencore investors would hold approximately 76% of the companies it envisages, while Teck investors would hold the remaining 24%.
Glencore’s proposal for a metals company would see it become the third largest copper producer in the world. It would list its proposed metals company in London, with a chief executive from Glencore and a Teck chairman.
Teck would propose a chief executive for the coal company and Glencore would be the chairman.
Jefferies analyst Christopher LaFemina described the proposal as compelling, but said that a higher price (and/or a cash kicker) was clearly required.