Mining minister says Teck should remain in Canada while Glencore bid remains in play
Teck Resources pulled a plan to split the company into two parts – one focused on base metals and the other on its coal assets – just hours ahead of a shareholder vote on April 26. Teck chief executive, Jonathan Price said the company would instead pursue a “simpler and more direct separation” plan.
Teck Resources has been fending off an unsolicited $23 billion takeover attempt from Glencore that was launched in April. Teck’s board has repeatedly rejected that offer but the decision to withdraw its plans to split the company could indicate Glencore’ offer still has life, according to the Financial Times.
The original proposal was to divide the company into separately listed businesses — one for metals and one for steelmaking coal — with the coal business continuing to pay royalties to the metals business for 3.5 years. Some shareholders had criticized that structure as being convoluted because of the royalty links.
Glencore had proposed to merge with Teck, then demerge into two companies — a metals and trading business based in Canada, and a giant coal miner that would be listed in New York. The Swiss miner said it would not be interested in a deal if Teck proceeded with its own split.
Meanwhile, Teck received support from Canadian finance minister Chrystia Freeland who said the company should remain in Canada to help the country expand its critical minerals industry.
Reuters reported that Freeland’s comments were the clearest indication to date that Ottawa is closely watching the takeover battle between Teck and Glencore because of Teck’s interests in copper and other metals critical to a green energy transition.
“We need companies like Teck here in Canada, companies with a strong commitment to Canada,” Freeland wrote in a letter seen by Reuters to the Greater Vancouver Board of Trade, which has concerns about Teck’s future in Canada.
After Freeland’s comment, Glencore pointed out to its April 3 letter where it has said its deal “would not materially change the day-to-day operations at Teck’s assets in Canada. It will honour all of Teck’s commitments to local Canadian communities as well as to Indigenous communities to ensure their interests are acknowledged and protected."
Photo credit: Teck Resources