Glencore, the Swiss miner and trader, has informed Teck Resources shareholders of its readiness to enhance its takeover offer of $22.5 billion, thereby increasing the pressure on the Canadian miner to abandon its restructuring plans and initiate negotiations. In a public letter released on Wednesday, Glencore stated that if Teck’s board failed to engage in talks, it would consider presenting the offer directly to the shareholders. The offer, which was made in the form of an all-share proposal, came as Teck’s own plan to spin off its metallurgical coal business and concentrate on copper and zinc approaches an April 26 vote.
This bid is part of a series of acquisition offers within the mining industry fueled by the growing demand for copper and other metals crucial to the transition to green energy. Glencore’s CEO, Gary Nagle, traveled to Canada to meet with shareholders last week after modifying its unsolicited bid to include up to $8.2 billion in cash. However, Teck’s board dismissed the offer as too low, stating that it would expose shareholders to a large thermal coal business and an unwanted oil trading unit unnecessarily.
Glencore has released a statement asserting that it has never claimed that its proposal is “best and final,” and that it is willing to alter and enhance its proposal. The firm also emphasized that engagement would enable them to improve the terms and value of their offer, which would benefit all Teck shareholders. Glencore’s proposal aims to merge and spin off its thermal coal unit and Teck’s steelmaking coal business.
Teck’s management team has estimated that after its intended restructuring, shares in the metals business could trade at C$100 ($74.67) or higher, roughly 55% above the group’s closing price on Tuesday. Glencore’s original bid, made privately, represented a 20% premium to Teck’s closing price on March 26. This week, JP Morgan analysts claimed that Glencore could pay as much as $27.2 billion.
Teck has expressed its intention to explore a corporate transaction or partnership after its restructuring. Sources close to the matter disclosed that Teck has received approaches from more than six mining companies interested in its valuable metals business.