Glencore Plc reiterated its offer to buy Teck Resources Ltd. and said it’s still willing to bid more, pressing its advantage after the Canadian miner’s shareholders rejected a plan to split the business.
(Bloomberg) — Glencore Plc reiterated its offer to buy Teck Resources Ltd. and said it’s still willing to bid more, pressing its advantage after the Canadian miner’s shareholders rejected a plan to split the business.
The companies have spent the past three weeks in a bruising fight to win over Teck investors, after its board and controlling shareholder publicly rejected Glencore’s proposal. The Swiss commodities giant offered to buy Teck for $23 billion and then create two new companies combining their respective metals and coal businesses.
Teck canceled a shareholder vote on its plan to spin off its coal business just hours before a shareholder meeting on Wednesday, admitting that it did not have the support it needed. The company said it would work on a new plan to split out coal, and once again dismissed Glencore’s proposal.
Read: Teck Pulls Vote on Coal Split, Handing Momentum to Glencore
Glencore on Thursday repeated that it is willing to improve its offer if Teck will enter talks, but that it is prepared to make a bid directly to shareholders otherwise.
Still, any attempt by Glencore to circumvent Teck’s board would face significant hurdles without support from its founding family, the Keevils, who have a blocking vote because they dominate the company’s “supervoting” Class A shares.
“Glencore hopes that the Teck board will, against the backdrop of the feedback provided by its shareholders, engage constructively in order to fully explore our proposal which has not been done to date,” the company said in statement.
The vote on Wednesday had turned into a showdown over the future of Teck — Glencore said its proposal would be dead if the spinoff were approved, as it tried to persuade shareholders to vote “no” and pressure the company to engage.
The collapse of Teck’s proposal has put the miner on the back foot. Teck Chief Executive Officer Jonathan Price said yesterday that the miner would come up with simpler plan to separate coal, a goal that he said was supported by most shareholders. Glencore instead has framed the failed vote as a mandate to begin talks on its offer.
Teck had proposed creating a new steelmaking coal company, called Elk Valley Resources, that would continue to pay a royalty to its remaining metals business for several years. The plan was criticized as being too complicated, as the ongoing link between the two companies would have muddied its appeal for investors who no longer wanted exposure to coal.
Glencore made its proposal to Teck on March 26 and has so far held off increasing the price tag, although it later offered to add a cash component to buy shareholders out of the combined coal business.
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