Investment manager Letko Brosseau & Associates Inc. will vote in favor of Teck Resources Ltd.’s plan to split the company, saying it will ultimately offer more value for shareholders than a Glencore Plc takeover.
(Bloomberg) — Investment manager Letko Brosseau & Associates Inc. will vote in favor of Teck Resources Ltd.’s plan to split the company, saying it will ultimately offer more value for shareholders than a Glencore Plc takeover.
The unsolicited offer by the Swiss commodities giant dramatically undervalues Teck’s metallurgical coal assets, Peter Letko, co-founder of the Montreal based firm, said in a Thursday interview.
Glencore originally offered to buy Teck for $23 billion in shares, and earlier this month revised its proposal to give Teck shareholders an option to receive as much as $8.2 billion in cash instead of stock in a spun-off coal company. Letko said the coal number is “extremely low.”
“I think ultimately this is going to be worth maybe twice what they’re offering,” he said. “I don’t think that we’re in the ballpark. I doubt very much that we’d see a big improvement in their proposal.”
Representatives from Letko Brosseau have spoken to Teck and met Glencore, Letko said. The company has owned shares of the Vancouver-based miner for at least 20 years and currently holds about 3.6 million shares, he said.
Letko called Glencore “rather clever” for making a takeover attempt before other companies could put together offers. Teck’s controlling shareholder, Norman Keevil, has signaled that he’d support a transaction with the “right partner, on the right terms” after the firm separates its metals business from its coal operations. Shareholder are expected to vote on the plan at an April 26 meeting.
“Given a little time, you’ll see broader interest and a real competitive bidding for these assets,” Letko said. “And that’s the way I think we’re going to get the best price.”
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