Teck Resources calls Glencore bid a ‘non-starter’ in restructuring push

Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) urged investors on Monday to support its plan for splitting into two companies at a vote later this month, adding that Glencore’s (LSE: GLEN) proposed takeover was a structurally flawed deal and “a complete non-starter.”

CEO Jonathan Price, who took the company’s top job in September, said in a conference call that being acquired by Glencore would end up destroying value for the company’s shareholders.

The Swiss miner and commodities trader has proposed buying Canada’s largest diversified miner at a 20% premium to its market value. If Teck were to accept the US$23-billion deal, Glencore plans to subsequently separate itself into two companies, with one unit holding assets in thermal and metallurgical coal, and the other its base-metals portfolio, along with its oil assets.

In an investor presentation published ahead of the conference call, Teck said the move would expose its shareholders to a larger thermal coal and oil trading portfolio, which is something many investors are trying to avoid in light of the global push to reach net zero emissions by 2050. 

Simultaneously, the deal would reduce the Vancouver-based miner’s shareholders’ exposure to copper and expose them to significant jurisdictional, ESG (environmental, social and corporate governance) and execution risks, it said.

This makes Glencore an “unsuitable acquirer” because of the risks involved in its business, Teck noted.

In a move to block Glencore’s approach, Canadian gold magnate Pierre Lassonde is planning to buy a stake in Teck’s spinoff coal company to protect it from a foreign takeover, The Globe and Mail reported Friday.

Lassonde’s strategy backs the position of Teck’s controlling shareholder Norman Keevil, who has said he will not sell to a foreign company at any price.

With about two weeks until the Apr. 26 vote, Teck and Glencore each have a tight deadline to win over the Canadian miner’s investors. 

Teck’s Highland Valley Copper operations, British Columbia, Canada. Image courtesy of Teck’s sustainability report 2022

Teck operates under a dual-class structure in which the family of octogenarian mining magnate Norman Keevil owns the majority of class A “supervoting” shares, each worth 100 votes. The class B shares are worth one vote each.

The business split requires two-thirds support from both class A and class B shares, meaning that investors with a small percentage of the total voting rights could have the power to sink the company’s vision.

If Glencore ends up acquiring Teck, the deal would go down in history as one of the world’s biggest-ever mining takeovers.