Glencore is the latest company that has snubbed the London Stock Exchange. The company confirmed plans to list its coal division in New York after it announced that it would spin off the business.
The FTSE 100 miner has announced that it will purchase a majority stake of the steelmaking coal division of Canada’s Teck Resources, for $6.9bn. (£5.5bn). This brings to an end months of tense negotiation.
This sets the stage for the breakup of Glencore. Glencore proposes to separate the newly combined coal business into a stand-alone entity.
If approved by the shareholders, it’s expected that the demerger will happen within 24 month of Teck closing its deal.
In an insult to London, bosses reiterated their plans on Tuesday to list the coal business combined in New York instead of London, with secondary listings going to Toronto and Johannesburg.
The London Stock Exchange will continue to list the remaining Glencore Group, which will concentrate on “transition metals”, used in electric vehicles and other green technologies.
A source close to Glencore said that the New York listing was proposed because of the large pool of capital and the “pragmatism”, among American investors, who are more willing than ever to invest in fossil-fuels.
Gary Nagle’s boss at Glencore has complained before that European investors are too focused on environmental and social measures instead of profits.
He said on Tuesday that there is a lot of interest in the North American market for coal, and added: “We think we could get a higher valuation in New York for this business than in London.”
Glencore expects that the Teck transaction will close in the third-quarter of 2024. This will pave the way for the listing of coal by the second half 2026.
London is concerned about a possible exodus of firms going overseas or being bought out.
In the same year, the Cambridge-based chip designer Arm decided to ignore the London Stock Exchange and list its shares on the New York Stock Exchange, despite the UK Government’s heavy lobbying.
NortonLifeLock bought Avast, a cyber security firm, after Schneider delisted Aveva, its industrial software division.
BHP, the Australian mining giant, is also one of those companies that will be delisting from London by 2022. The company has chosen to centralise its operations in Australia.
According to research conducted by City broker Peel Hunt, the London market will lose 30 companies worth over £100m this year. This is in addition to more takeovers, delistings, and other changes.