Teck’s proposed separation of its coal assets, as EVR, which includes the Elk Valley mine, attracted Glencore’s attention.
(Photo: Teck Resources)
Teck Rejects Glencore Proposal
Subsequently, Glencore Plc confirmed that it submitted a proposal to merge with Teck and to simultaneously demerge their combined metals and coal businesses to create MetalsCo and CoalCo.
Teck’s board reviewed the Glencore proposal and unanimously rejected it. Glencore then offered to modify the terms of its proposed merger-demerger with Teck. Acknowledging that some Teck investors may prefer a full coal exit while others may not desire thermal coal exposure at all, Glencore introduced a cash element to effectively buy Teck shareholders out of their coal exposure. Teck shareholders would receive 24% of MetalsCo and $8.2 billion in cash.
“Glencore has made two opportunistic and unrealistic proposals that would transfer significant value to Glencore at the expense of Teck shareholders,” said Sheila Murray, chair of the Board, Teck. “Teck’s proposed separation creates a significantly greater spectrum of opportunities to maximize value for Teck shareholders. The Special Committee and Board continue to recommend that shareholders vote for the proposed separation into Teck Metals and EVR as the best pathway to fully realize the greatest value.”
“Glencore recognizes that post-separation it would be exposed to significantly greater competition from other parties, which is why it is trying to frustrate Teck’s separation process,” said Jonathan Price, CEO, Teck. “The fundamental flaws of Glencore’s revised proposal continue to make it a non-starter. It does not address major inherent risks including substantial regulatory hurdles, jurisdictional and ESG concerns, and diluting the base metals business with significant oil trading.”
Teck believes its pending separation provides shareholders with a greater set of options to maximize value. The separation minimizes execution risk, provides a path to fulfill the full potential of Teck Metals, realizes significant value for the high-quality steelmaking coal assets of EVR and does not foreclose future opportunities for other value enhancing transactions. Teck’s Board of Directors continues to unanimously recommend that shareholders approve the previously announced reorganization of Teck’s business.