Glencore says it is willing to cut a deal directly with shareholders if a planned split of Teck's metal, coal assets is stopped.

With Teck Resources Ltd.'s board of directors and management refusing to consider its roughly US$22.5 billion (C$30.3 billion) merger proposal, Glencore is taking its increasingly aggressive takeover bid directly to the diversified Canadian mining company's shareholders.

"Glencore is willing to make an offer directly to Teck shareholders if the Proposed Teck Separation does not proceed and Glencore believes that this is required where there continues to be no engagement from the Teck Board," Glencore CEO Gary Nagle penned in an April 19 letter to Teck Class B shareholders.

Teck Class A and Class B shares both trade on the Toronto Stock Exchange. The primary difference between the two is Class A shares carry the right for 100 votes each, and the Class B shares are the standard one vote per share.

The family of Norman Keevil, who served as Teck's chairman for 55 years and was appointed chairman emeritus after his 2019 retirement, owns a large portion of the Class A shares. While this voting block is enough to stymie Glencore's takeover attempt, it is not enough votes to force a separation of Teck assets that Glencore hopes will not happen.

Under a strategy announced earlier this year, Teck intends to spin its steelmaking coal unit into Elk Valley Resources, which would be a world-leading steelmaking coal mining company that would export premium coal mined from Teck's current portfolio in Southern British Columbia.

A rebranded Teck Metals would continue to advance the Canadian company's portfolio of copper- and zinc-forward metals mining operations.

Glencore, however, wants to keep all Teck assets intact until after it merges with the Canadian mining company. Once the Glencore and Teck portfolios are combined, Glencore would then decouple the larger set of coal and metal assets.

"We continue to believe that the Proposed Merger Demerger being a merger and not a takeover, is demonstrably superior to the Proposed Teck Separation," Nagel wrote.

In its own letter to shareholders, Teck said the Glencore offer "is not a realistic or viable option."

"This is a distraction – a transparent and opportunistic attempt to disrupt our separation plan with an ill-defined and highly uncertain proposal," the Canadian mining company wrote.

Pivotal April 26 vote

Teck continues to contend that its own plan to decouple steelmaking coal and base metals assets offers the best value for shareholders.

"A vote for the separation is a vote to create two world-class, pure play mining companies, providing both unparalleled exposure to a premier base metals platform and an attractive opportunity to remain invested in a high-quality, high-margin steelmaking coal business," Teck CEO Jonathan Price inked in an April 19 letter to shareholders.

While Glencore already believes its offer is the best choice for Teck shareholders, Nagel says the Switzerland-based commodities giant is willing to sweeten the pot, as well as make changes to its proposal to address issues raised by the Teck board.

Glencore, however, says the Teck board has refused to meet to discuss a better offer and how the transaction could be shaped to address concerns. As such, the Swiss company has taken its case directly to Teck Class B shareholders.

The primary reason for this direct engagement is to convince shareholders to postpone an April 26 vote on Teck's proposed decoupling of steelmaking coal and metals assets, or vote against the separation if the meeting takes place.

Once Teck is divided into Elk Valley Resources and Teck Metals, Glencore would need to make separate deals with two boards and management teams to absorb the assets it could have with a single deal ahead of the demerger.

"It is for this reason that Glencore has stated that it cannot pursue its proposal if the Proposed Teck Separation proceeds," Nagel wrote.

Teck, on the other hand, is urging shareholders to vote for the demerger next week.

"We fully believe that Glencore's proposals are nothing more than an opportunistic attempt to interfere with the vote at Teck's annual and special meeting of shareholders on April 26th to their benefit and to the detriment of our shareholders," said Price.

Teck says it will be willing to talk with Glencore or other suitors for its pure-play metals business after the thermal coal assets are moved out.

According to an April 16 Reuters report, Teck has been approached by Vale, Anglo American, Freeport-McMoRan, and other global-scale mining companies interested in cutting deals for Teck Metals following the decoupling.

Keevil says a post-demerger deal is something he could get behind.

"I would support a transaction – whether it be an operating partnership, merger, acquisition, or sale – with the right partner, on the right terms for Teck Metals after separation," the Teck Resources chairman emeritus said. "Based on my decades of experience building a successful mining company, I believe that pursuing a sale or merger transaction now would rob our shareholders of significant post-separation value."

The larger shareholder base, however, will ultimately decide what the future of Teck and its assets will look like during a pivotal vote on April 26.