Glencore makes fresh bid for Teck coal arm as takeover battle takes new twist
Glencore has redoubled its efforts to acquire Canadian miner Teck Resources, offering to buy its steelmaking coal business as a standalone company.
In the latest twist of a protracted industry saga, the commodities giant has changed its approach after both its attempted to merge the two companies with a £17.9bn ($22.5bn) bid were rebuffed by Teck’s board in April earlier this year.
Under the fresh proposal, Glencore would snap up Teck’s steelmaking coal business and then de-merge the business unit together with its own energy coal assets one to two years after the deal closes.
The size of the offer remains undisclosed.
The Swiss company confirmed it was still “willing to pursue” its offer to buy the whole of Teck — including its North American industrial metal mines.
Teck Resources told news agency Reuters that Glencore’s latest offer was “one of a number of proposals under consideration” and “preliminary in detail, conditional and non-binding”.
It revealed that on 6th June it had received several proposals for its coal business, as it reworks its own plan to split it from its copper and zinc unit.
Other suitors circling Teck include Canadian mining entrepreneur Pierre Lassonde and Japanese steel maker Nippon Steel Corporation.
Teck has to consider prospective offers for the company, with its shareholders scrutinising the company’s board, share structure and demerger plans.
While Teck managed to push back Glencore’s previous offers, it has also failed to secure enough shareholder support for its own plans – pulling them from a vote in late April.
Glencore mines and trades thermal coal – a fossil fuel used to produce electricity – alongside smaller amounts of coking coal to make steel.
Even though it wants to demerge the coal units of both companies, its fossil fuel holdings have deterred investors and troubled Teck’s board as it looks to divest from carbon intensive energy sources rather than ramp up its holdings.
As part of its original proposal, Glencore offered up to £6.51bn ($8.2bn) in cash to Teck shareholders – who do not want exposure to thermal coal.
The latest bid reflects Glencore’s persistence and interest in Teck, but is also a concession by the company, with chief executive Gary Nagle last month arguing that buying Teck’s coal business as a standalone unit was a “distant second” for the Swiss mining company compared to merging plans.