Teck Resources Ltd. rejected a revised $23 billion takeover offer from Glencore Plc and said its planned spinoff of coal-mining assets — now on a potentially faster timeline — remains the best option for investors.
(Bloomberg) — Teck Resources Ltd. rejected a revised $23 billion takeover offer from Glencore Plc and said its planned spinoff of coal-mining assets — now on a potentially faster timeline — remains the best option for investors.
“Glencore has made two opportunistic and unrealistic proposals that would transfer significant value to Glencore at the expense of Teck shareholders,” Sheila Murray, the chair of Teck’s board, said Thursday in a statement. “Teck’s proposed separation creates a significantly greater spectrum of opportunities to maximize value for Teck shareholders.”
It’s the second time in as many weeks that Teck has rejected a takeover offer from the Swiss commodities giant. Glencore stepped up its pursuit of Teck with a new proposal on Tuesday that adds an $8.2 billion cash component, an effort to address one of the key objections among some Teck investors — that under Glencore’s deal, they would end up holding shares in a new entity that combines both companies’ coal assets. The revised offer means those shareholders could elect to take the cash instead.
Read more:
- Glencore Tweaked Teck Bid As Some Investors Balked at Coal
- ISS Recommends Teck Shareholders Vote Against Coal Spinoff
In addition to rejecting the Glencore bid, Teck Resources also said it is making changes to its own proposal to separate its coal steelmaking business from the base metals assets, including reducing the minimum term of the royalty paid to the Teck metal company to three years from more than five earlier. That “potentially shorter path to full separation” comes following investor feedback, the company said in a separate statement.
Teck Chief Executive Officer Jonathan Price is in Toronto on Thursday talking to investors, he said in a phone interview.
Teck’s own plan to split out its coal business will go to a shareholder vote April 26.
What Bloomberg Intelligence Says:
Teck’s rejection of Glencore’s revised bid, which included an $8.2 billion cash component but no bump in offer premium, puts the ball back in Glencore’s court. Glencore may need to add around $2-$3 billion to its bid, in our view, just to start addressing Teck’s concerns around valuation. Even then, it’s conceivable that Teck’s board will continue to urge shareholders to vote for its own separation plan on April 26, after tweaking the transaction terms to allow for an earlier separation of the unbundled coal and metals companies.
— Alon Olsha, BI metals and mining analyst
Teck rejected Glencore’s original proposal to buy the company in an all-share deal. Glencore’s coal mines produce thermal coal, the most polluting fuel. Teck’s coal business is focused on steelmaking coal. Also under Glencore’s proposal, Teck investors would end up owning about 24% of the companies’ combined metals businesses.
(Updates with revised Teck plan. An earlier version of this story corrected the spelling of Glencore in the first paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.