In a surprise development, Vancouver-based mining giant Teck Resources backtracked on a plan to split itself into two companies in a last minute bid to avoid a hostile takeover bid from Swiss rival Glencore..Instead it said it would “pursue a simpler and more direct separation approach” to create a pure play metals business and a stand-alone metallurgical coal producer..The results of a long-awaited shareholder vote were to be released at its annual meeting this morning, but pulled the proposal, literally, moments before it was to begin. Splitting the company was seen as a way of sidestepping a hostile bid from Baar-based Glencore which isn’t a mining company per se, but rather a commodities trader with diversified interests in mining production..It’s one of the world’s largest marketers of copper, cobalt, zinc, nickel, ferrochrome — metals used in the production of EVs and windmills — as well as coal. .Instead, Teck’s “board will focus on incorporating the feedback heard into a revised value-enhancing separation to maximize value for shareholders,” Chair Sheila Murray said in a statement. .Although the company said it gained broad support for the split, there were notable holdouts, including Chinese sovereign wealth fund CIC which holds about 10% of Teck’s shares..On April 19 Glencore wrote an ‘open letter’ to Teck shareholders warning that a split would negate its all-share offer worth $23 billion US and erode any inherent value in the combined company. .“The significant value destruction that would arise from the Proposed Teck separation … would mean Glencore’s proposal could not be implemented in its current form, and the full value proposition could not be realized by Teck shareholders.”.Although Teck CEO Jonathan Price called Glencore’s proposal a “non-starter” in a release, analysts said the fact Teck pulled the plug so late in the game shows it didn’t have enough support to win the vote and keeps the door open for Glencore to ultimately acquire the company. .It also comes as federal politicians, including Deputy Prime Minister Chrystia Freeland, expressed support for keeping Teck in Canadian hands. Any takeover would have to be reviewed by the federal government under new guidelines for critical minerals which are considered strategic assets. .Markets reacted positively to news of a renewed takeover battle, sending Teck shares (TECK.B:TSX) up about 5% or $2.44 in Toronto today, to $61.35.
In a surprise development, Vancouver-based mining giant Teck Resources backtracked on a plan to split itself into two companies in a last minute bid to avoid a hostile takeover bid from Swiss rival Glencore..Instead it said it would “pursue a simpler and more direct separation approach” to create a pure play metals business and a stand-alone metallurgical coal producer..The results of a long-awaited shareholder vote were to be released at its annual meeting this morning, but pulled the proposal, literally, moments before it was to begin. Splitting the company was seen as a way of sidestepping a hostile bid from Baar-based Glencore which isn’t a mining company per se, but rather a commodities trader with diversified interests in mining production..It’s one of the world’s largest marketers of copper, cobalt, zinc, nickel, ferrochrome — metals used in the production of EVs and windmills — as well as coal. .Instead, Teck’s “board will focus on incorporating the feedback heard into a revised value-enhancing separation to maximize value for shareholders,” Chair Sheila Murray said in a statement. .Although the company said it gained broad support for the split, there were notable holdouts, including Chinese sovereign wealth fund CIC which holds about 10% of Teck’s shares..On April 19 Glencore wrote an ‘open letter’ to Teck shareholders warning that a split would negate its all-share offer worth $23 billion US and erode any inherent value in the combined company. .“The significant value destruction that would arise from the Proposed Teck separation … would mean Glencore’s proposal could not be implemented in its current form, and the full value proposition could not be realized by Teck shareholders.”.Although Teck CEO Jonathan Price called Glencore’s proposal a “non-starter” in a release, analysts said the fact Teck pulled the plug so late in the game shows it didn’t have enough support to win the vote and keeps the door open for Glencore to ultimately acquire the company. .It also comes as federal politicians, including Deputy Prime Minister Chrystia Freeland, expressed support for keeping Teck in Canadian hands. Any takeover would have to be reviewed by the federal government under new guidelines for critical minerals which are considered strategic assets. .Markets reacted positively to news of a renewed takeover battle, sending Teck shares (TECK.B:TSX) up about 5% or $2.44 in Toronto today, to $61.35.
