Teck cancels vote on proposed separation
North of 60 Mining News - April 26, 2023
Last updated 4/26/2023 at 10:39am
Just hours before shareholder vote, Teck pulls its plan to split company; leaves door open for Glencore to pursue takeover.
On the dawn of its annual shareholder meeting, Teck Resources Ltd. removed a pivotal proposal to split the iconic Canadian mining company into a base metals-focused company to be rebranded as Teck Metals Corp. and a metallurgical coal company to be named Elk Valley Resources Ltd.
Shareholder approval of this split would have likely put to rest an increasingly hostile takeover bid by Glencore, which wants to merge all of Teck Resources' metals and coal assets into its own portfolio. A splitting of Teck would have increased the complexity of such a merger.
The cancellation of the vote indicates that Teck's board and management were not confident that it had the votes necessary for the split that would have likely stymied Glencore's takeover bid.
Short of the Teck board's willingness to sit at the negotiating table and consider its roughly US$22.5 billion (C$30.3 billion) merger proposal, a postponement of the vote on the proposed Teck split is exactly what Glencore had hoped for.
"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 shareholders.
Further details on Glencore's appeal to shareholders can be read at Glencore takes offer to Teck shareholders in the April 20, 2023 edition of North of 60 Mining News.
Teck's board, which continues to consider Glencore's proposal as a "non-starter," is hoping to reshape its separation plan in a way that is more appealing to shareholders.
"On behalf of Teck's board, I thank our shareholders for their support and consideration, as well as the feedback shared throughout this process," said Teck Resources Chair Sheila Murray. "The board will focus on incorporating the feedback heard into a revised value-enhancing separation to maximize value for shareholders."
"Our plan going forward is to pursue a simpler and more direct separation, which is the best path to unlock the full value of Teck for our shareholders," Teck Resources CEO Jonathan Price added.
It is unclear what this simpler separation will look like, but numerous global mining companies, financial institutions, and even the United Steelworkers Union have come out in support of Teck as it pursues a plan that will keep its assets from being consumed by an international commodities giant.
In the meantime, the delay on a Teck separation vote offers Switzerland-based Glencore additional time to negotiate with Teck shareholders as it seeks to solidify its position for a takeover of a mining company that has become an icon of Canada and its mining industry.