Investors urge Teck to engage with Glencore after rejecting $23bn takeover bid
Teck Resources is facing increasing pressure from its own investors to hold talks with Glencore, after the Canadian mining group rejected its latest bid for the firm.
Teck has rebuffed two takeover bids from the European commodities giant, including a sweetened £19.7bn bid earlier this week.
Glencore has proposed combining their metals businesses to create a £72.5bn commodity juggernaut, while separately combining their coal assets in a spin-off company.
The latest offer from the FTSE 100 company involved a £6.6bn cash component for investors looking to avoid exposure to Glencore’s thermal coal businesses.
Some investors are also pushing back against Teck’s own plans to split its business.
Influential shareholder group Glass Lewis has backed calls from investment advisors ISS for Teck shareholders to reject its own business plans, ahead of a crucial vote on the matter on 26 April.
Glass Lewis has argued, according to reports, that Glencore’s offer was “a reasonably compelling strategic alternative that, at a minimum, warrants the company hitting the pause button on the separation and engaging in further discussions with Glencore”.
Glencore boss Gary Nagle has allegedly been meeting Teck investors in Canada to convince them not to back the Teck split, speaking to around 120 shareholders, The Sunday Times reported.
Teck chief executive Jonathan Price has consistently argued its own separation plan will create more value for shareholders.
Teck is effectively controlled by the founding Keevil family. A controversial dual-class structure means they control the majority of the more powerful A shares. Norman Keevil, chairman emeritus, has confirmed he is not willing to sell at any price.
Meanwhile, some Teck investors question its decision to spin off its coal assets but continue to use the cashflows from them to fund the separate metals business for several years.
Paul Moore at Sydney-based PM Capital told The Sunday Times: “We are perplexed at the coal spin-off as it is a spin-off in name only. Teck retains effective ownership of all the coal free cashflow. It is complicated and we think will create the dynamics for the coal business to be mispriced — the opposite of what should be intended.”
A Greenlight Capital representative told The Sunday Times that the Glencore offer “isn’t interesting” because “Teck has better assets and a lower valuation”.
Glencore has declined to comment on The Sunday Times report.
Teck has also been approached for comment.