# Copper miner Teck Resources rejects Glencore’s $22.5 billion offer
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-04
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Teck Resources Rejects $22.5 Billion Bid from Glencore
Meta Description: Teck Resources rejects Glencore's bid due to concerns over exposure to coal, oil, LNG, and jurisdictional risk. Stock prices react with Teck shares rising
URL: https://financedigest.com/copper-miner-teck-resources-rejects-glencores-22-5-billion-offerhtml

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By Clara Denina and Pratima Desai

LONDON (Reuters) -putting down for author to review and revise -dg

Copper and zinc miner Teck Resources on Monday rejected an unsolicited $22.5 billion bid from Glencore Plc, citing reluctance to expose its shareholders to thermal coal, oil, LNG and related sectors.

New York-listed [shares of Teck jumped](https://www.financedigest.com/orpea-shares-jump-on-q4-revenue-and-cash-boost.html "Orpea shares jump on Q4 revenue and cash boost") 19.6% on Monday, their largest daily rise in two years. London-listed shares of Glencore closed down 2.6%.

Glencore’s all-share [offer represents a 20% premium to Teck’s closing stock price](https://www.financedigest.com/factbox-u-s-offers-new-details-on-plan-to-cap-russian-oil-prices.html "Factbox-U.S. offers new details on plan to cap Russian oil prices") on March 26, when the bid was made privately. The proposal [includes a plan to simultaneously spin off the companies’ thermal and steelmaking coal](https://www.financedigest.com/citi-pledges-to-cut-emissions-for-more-sectors-including-coal.html "Citi pledges to cut emissions for more sectors including coal") businesses and rebrand the remaining company as GlenTeck.

Glencore [Chief Executive](https://www.financedigest.com/exotix-draws-sberbanks-us-chief-executive-in-triple-hire-to-extend-global-capabilities.html "Exotix Draws Sberbank’s US Chief Executive in Triple Hire to Extend Global Capabilities") Gary Nagle, asked in a conference call with investors if a sweetened deal was possible, said: “We should not be talking about that. This is not a takeover, but a merger.”

Some analysts saw room for a [higher offer](https://www.financedigest.com/credit-suisse-offers-higher-deposit-rates-in-asia-to-woo-the-wealthy-sources.html "Credit Suisse offers higher deposit rates in Asia to woo the wealthy – sources").

“We do see a compelling strategic rationale for this combination,” said Chris LaFemina, an analyst at Jefferies. “Based on Glencore’s response, we believe a higher offer is likely. However, based on the Teck press release… it is not clear that a [modestly higher](https://www.financedigest.com/oil-set-to-end-turbulent-2022-modestly-higher.html "Oil set to end turbulent 2022 modestly higher") price is all that is necessary.

Teck said it worries any combination of the two companies would expose its shareholders to Glencore’s large thermal coal business, an unwanted [oil trading](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream") business and significant jurisdictional risk, all of which would reduce its value.

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The board is not contemplating a sale of the [company at this time,”](https://www.financedigest.com/oxford-bus-company-outsources-for-the-first-time.html "Oxford Bus Company Outsources for the First Time") Teck Chair Sheila Murray said in a letter to Glencore’s board.

Teck said more value could be created through a restructuring proposed earlier this [year in which the Vancouver-based miner would spin](https://www.financedigest.com/novartis-to-spin-off-generics-business-sandoz-next-year.html "Novartis to spin off generics business Sandoz next year") off its steelmaking coal unit to focus on copper and other industrial metals. A vote on this proposal is scheduled for April 26.

After the separation, Teck’s metal-focused unit plans to be known as Teck Metals Corp, while the divested unit would be listed in Toronto as Elk Valley Resources Ltd.

Teck believes its base metals business, once fully independent, would have a much better chance of attracting a competitive bid than the company in its current form, according to a source [familiar with management’s](https://www.financedigest.com/a-new-vision-for-grant-management-requires-familiar-it.html "A new vision for grant management requires familiar IT") thinking.

Addenda Capital, which holds about 1% of Teck’s shares, said it [supports Teck’s existing plans](https://www.financedigest.com/how-to-support-clients-with-complex-succession-planning.html "How to support clients with complex succession planning"). “The (Glencore) bid is too low for us to have any interest,” Addenda’s Todd Kapala told Reuters.

Analysts at Scotiabank said they believe the chances of any deal with Glencore to be “extremely low.”

We view the Glencore [offer as an opportunistic bid designed to take advantage](https://www.financedigest.com/advantages-of-offshore-banks-what-they-have-to-offer-millenials.html "Advantages of offshore banks: what they have to offer Millenials") of the current dislocation in Teck shares related to the proposed near-term business separation,” they said.

Canada’s Keevil family controls Teck through its dominant [ownership of ‘A’ class of shares](https://www.financedigest.com/is-shared-property-ownership-right-for-you.html "Is Shared Property Ownership Right for You?"), which have more voting power than the numerous ‘B’ class shares held by institutions, could make any further merger discussion hard.

Norman Keevil, chairman emeritus of [Teck Resources](https://www.financedigest.com/norway-sovereign-fund-backs-teck-resources-in-battle-with-glencore.html "Norway sovereign fund backs Teck Resources in battle with Glencore"), agreed with Teck’s rejection of Glencore’s offer.

Now is not the time to explore a transaction of this nature, and I have the utmost confidence in the board’s and our management teams’ [strategy to maximize value](https://www.financedigest.com/the-value-of-customer-centricity-to-c-suite-financial-strategy.html "The value of customer-centricity to C-Suite financial strategy") for … shareholders after the separation,” Keevil said.

This is not the first time [Glencore and Teck have talked about a possible spinoff](https://www.financedigest.com/glencore-courts-120-teck-investors-for-bid-backing-as-spinoff-vote-looms-source.html "Glencore courts 120 Teck investors for bid backing as spinoff vote looms -source") and merger of their coal businesses. Informal discussions in 2020 broke down.

Glencore’s Nagle said that under this proposed deal, the new GlenTeck would be [listed in London](https://www.financedigest.com/oneweb-eutelsat-set-for-secondary-london-listing-the-times.html "OneWeb-Eutelsat set for secondary London listing – The Times") and could produce around 3 million tonnes of copper annually, making it one of the world’s largest miner of the red metal used in rechargeable batteries and charging stations for electric vehicles.

Copper assets are major [targets for mining companies](https://www.financedigest.com/britain-toughens-up-diversity-targets-for-uk-companies.html "Britain toughens up diversity targets for UK companies") hunting for minerals needed for the energy transition.

The merged coal company would be primarily listed in New York, Nagle said, based on the feedback received from [investors and appetite](https://www.financedigest.com/investor-appetite-for-italy-returns.html "Investor appetite for Italy returns") for such a company there.

Nagle added that he did not envisage major antitrust issues.

(Reporting by Clara Denina, Pratima Desai, Divya Rajagopal, Ankit Kumar, David Carnevali and Mrinalika Roy; Editing by Arun Koyyur, Tomasz Janowski, Ernest Scheyder, Paul Simao, Jonathan Oatis and David Gregorio)


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