Glencore willing to take Teck Resources bid directly to shareholders

Swiss commodities giant Glencore said it is willing to present its takeover offer directly to shareholders of Teck Resources Ltd. if the company’s board does not come to the negotiating table regarding its unsolicited proposal.

Meanwhile, Canada’s official opposition party waded into the fray by formally calling for the federal government to block any attempt by Glencore to acquire the Vancouver-based Teck, which is Canada’s largest diversified mining company.

“We believe that with engagement, we could further improve our proposal’s structure, terms and value, which would be in the best interests of all Teck shareholders,” Glencore said in a statement Thursday, its first public comments since Teck cancelled a key shareholder vote Wednesday on a plan to split its business — a plan that Glencore had opposed.

Teck called off the vote when it became apparent it did not have the required two-thirds majority approval from shareholders for the proposal, which would have split the company into Teck Metals and Elk Valley Resources. Instead, the company will pursue what it said will be “a simpler and more direct separation.”

The development was seen as a major win for Glencore in its campaign to acquire the Vancouver-based mining company. Though Teck CEO Jonathan Price said Wednesday the company continues to view Glencore’s US$23-billion unsolicited takeover offer as a “non-starter,” analysts have suggested Teck’s failure to secure shareholder support for its own plan shows Glencore now has the upper hand.

While the Swiss company’s offer represented a 20 per cent premium when it was first made, Glencore said Thursday it believes that if it could talk with the Teck board it could improve its offer and address the issues they have raised. 

“Glencore hopes that the Teck board will, against the backdrop of the feedback provided by its shareholders, engage constructively in order to fully explore our proposal which has not been done to date,” the company said.

However, even if Glencore’s offer were to be accepted, it’s far from clear that a takeover deal could go ahead. A merger would be subject to both a net-benefit review and a national-security review by the federal government, and some observers have pointed out Glencore’s pursuit of the Canadian company comes at the same time that the government has committed to a national critical minerals strategy as part of its overall climate plan.

The unsolicited pursuit of what is Canada’s largest mining company by an international giant has also triggered sentiments of economic nationalism. B.C. Premier David Eby has said he opposes a Glencore deal, and on Thursday, the federal Conservatives said the government should block a takeover attempt by the Swiss company.

There is precedent for such a move. In 2010, the Canadian government under Conservative Prime Minister Stephen Harper blocked Australian mining giant BHP Group’s proposed takeover of Potash Corp. of Saskatchewan.

“If Glencore’s acquisition is successful, Canada will lose the last remaining major mining company owned and headquartered in Canada, and tens of thousands of Canadians will be affected,” stated a news release from the office of Opposition leader Pierre Poilievre.

In a letter to the Greater Vancouver Board of Trade dated April 24, three senior federal cabinet ministers said Ottawa is watching the situation “very closely.”

“We need companies like Teck here in Canada,” stated the letter, which was signed by Deputy Prime Minister Chrystia Freeland, Industry Minister François-Philippe Champagne and Natural Resources Minister Jonathan Wilkinson.

Teck is controlled by the Keevil family, which owns the company’s class A shares together with Japanese company Sumitomo Metal Mining Co. Ltd.

Teck chairman emeritus Norman Keevil has said Glencore’s proposal is the wrong one, at the wrong time, but that he is open to talking about other possible deals once the company completes its own plan to split its business.

Price said Wednesday that shareholders have made it clear that they still like the idea of a separation and that additional buyers could come forward once Teck splits its coal assets from its metals business.

“We expect there would be significantly more interest in the businesses on a stand-alone basis,” he said. “And that is one of the reasons we continue to believe that separation is the right path forward here.”

This report by The Canadian Press was first published April 27, 2023.

Companies in this story: (TSX:TECK.B)

Amanda Stephenson, The Canadian Press