Glencore’s plan of separating the combined company into individual coal and ferro-alloy businesses would expose Teck shareholders to thermal coal and oil trading, and the proposal is not in the best interests of the company’s shareholders, said Teck
Canadian mining company Teck Resources announced that its Board of Directors has unanimously rejected an unsolicited takeover bid from Swiss commodity trading and mining company Glencore.
Glencore offered 7.78 of its shares, in exchange for each Teck Class B subordinate voting share, and 12.73 shares for each Teck Class A common share held.
The transaction price represents a 20% premium for both on the date of the offer, said Teck.
The proposal also includes a demerger of the combined thermal and metallurgical coal, along with the ferro-alloy operations of the merged company into a new publicly traded company.
The remaining entity would hold Glencore’s and Teck’s base metals operations along with Glencore’s oil and other commodity trading business, except coal trading and marketing.
Teck Board of Directors chair Sheila Murray said: “The Board is not contemplating a sale of the company at this time. We believe that our planned separation creates a greater spectrum of opportunities to maximise value for Teck shareholders.
“The Special Committee and Board remain confident that the proposed separation into Teck Metals and Elk Valley Resources (EVR) is in the best interests of Teck and all its stakeholders, is a much more compelling transaction and does not limit our optionality going forward.”
Teck considers the proposal opportunistic, as Glencore’s plan of separating the combined company into separate businesses would expose Teck shareholders to thermal coal and oil trading.
The company’s Board of Directors, in line with its fiduciary duties and consultation with its financial and legal advisors, has completed a detailed review of the unsolicited proposal.
The Board determined that the proposal is not in the best interests of the company or its shareholders, based on the recommendation of the independent Special Committee.
Teck proposed an alternative separation plan, which will see the creation of two Canadian mining companies, which would provide a superior value for all Teck shareholders.
Barclays Capital Canada and Ardea Partners served as financial advisors, while Stikeman Elliott and Paul, Weiss, Rifkind, Wharton & Garrison as legal advisors to Teck, on this transaction.
BMO Capital Markets, Goldman Sachs & Co., and Origin Merchant Partners served as financial advisors and Blake, Cassels & Graydon and Sullivan & Cromwell as legal advisors to the Special Committee.
Teck CEO Jonathan Price said: “The Glencore proposal would expose Teck shareholders to a large thermal coal business, an oil trading business and significant jurisdictional risk, all of which would negatively impact the value potential of Teck’s business, is contrary to our ESG commitments and would transfer significant value to Glencore at the expense of Teck shareholders.”