Teck Resources rebuffs Glencore’s $23bn offer

Canada’s Teck Resources rejected a proposal from Glencore to buy the company for shares and then spin off their combined coal businesses in the latest sign of deal making heating up across the mining industry.

Glencore’s proposal on March 26 represented a 20% premium at the time, according to Teck, and would be worth about $23.2bn at Friday’s closing prices, according to Bloomberg calculations.

Glencore’s approach comes as the world’s biggest miners shift back into deal-making mode after years on the sidelines. It also shows how large producers of coal such as Teck and Glencore are grappling with the future of those businesses. Mining companies are seeking to focus more on metals such as copper and nickel that will benefit from the clean-energy transition, and yet coal still remains a big profit driver.

Teck announced in February it plans to split its own business into coal and base metals companies, in a move that spurred speculation that it could become a target for bigger miners looking to grow copper production. For Glencore, a deal for Teck — which would be its biggest since buying Xstrata — could offer a neat solution towards hiving off its thermal coal business, which has faced pressure from some investors. The two companies held “conceptual discussions” about a similar transaction in 2020, according to a letter published on Monday by Teck. However, both the board and the controlling Keevil family were unambiguous in their stance: Teck is not up for sale.

“I unequivocally support the board’s decision to reject Glencore’s unsolicited offer to acquire Teck,” Norman Keevil, who holds the role of chair emeritus, said in a statement.

The proposal from Glencore envisaged creating a new publicly traded company comprising Glencore’s vast thermal coal and Teck’s coking coal mines, Teck said.

The remaining company would include Glencore’s and Teck’s base metals operations as well as Glencore’s oil and other commodity trading business, other than coal trading and marketing.

“The unsolicited proposal is an opportunistically timed attempt to transfer value to Glencore shareholders at the expense of shareholders.” Teck said. A Glencore spokesperson declined to comment.

Canada’s Keevil family, which has been involved with the firm for six decades, has long controlled Teck through majority ownership of class A shares, which carry more voting control than the firm’s Class B shares.

Teck said Glencore proposed offering 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck class A common share, a 20% premium for both on the date of the offer.

Glencore, under new CEO Gary Nagle, has been working to simplify its business in recent years, and talked down the prospect of big deals. Yet last month Nagle said there were obvious combinations in the industry, including putting together copper mines owned by Teck and Glencore in Chile.

Teck owns four copper mines in South America and Canada that produced 270,000 tonnes in 2022.

The company expects to double copper output after the second phase of its Quebrada Blanca project in Chile ramps up to full capacity by the end of 2023. It also owns coking coal mines that it plans to spin into the new company, Elk Valley Resources.