Teck Resources Ltd. stepped up efforts to fend off a $23 billion takeover attempt from Glencore Plc with a direct attack on its would-be suitor’s track record with investors.
(Bloomberg) — Teck Resources Ltd. stepped up efforts to fend off a $23 billion takeover attempt from Glencore Plc with a direct attack on its would-be suitor’s track record with investors.
After a week spent dismissing Glencore’s proposal, Teck escalated its rhetoric early Monday with a press release and investor call blasting the bid as a “departure from reality” while drawing attention to the “significant risks” of combining with the Swiss commodities giant.
Teck Chief Executive Officer Jonathan Price used the call to highlight what he called Glencore’s “poor track record” of creating shareholder returns. An accompanying presentation drew attention to the firm’s legacy of working in risky countries, including racking up more than $1.75 billion in penalties to resolve bribery and market-manipulation probes in the US, UK and Brazil.
Shares of Vancouver-based Teck fell as much as 4.2% in Canadian trading following the call. The stock was down 2.7% at 4 pm on the Toronto Stock Exchange.
Teck’s escalation comes as acquisition activity heats up in the mining industry, fueled by demand for more of the metals that underpin the global energy transition. Teck’s assets are appealing to several top mining companies including BHP Ltd. and Rio Tinto Group, which are said to admire the company’s copper mines in the Americas.
The Canadian miner and Glencore each have a tight deadline to win over investors, with a little more than two weeks before Teck shareholders vote on a company plan to split its metals and coal businesses and wind down its dual-class share structure. Price’s fighting words come a week after Glencore CEO Gary Nagle dismissed Teck’s concerns as “not real issues.”
Teck won over a top investor after Egerton Capital UK pledged to back the company’s proposal at an April 26 vote. Glencore’s proposal “woefully undervalues” the miner, said Teddy Molson, a partner of the London-based firm that owns a 2.25% stake in the company’s class B shares.
Teck’s standalone metals business would be “a vastly more attractive acquisition target than Teck Resources, because so many investors today just can’t buy coal,” Molson said in a Monday interview.
Teck’s dual-class share structure means any takeover bid requires support of Canada’s Keevil family, whose patriarch has indicated he will not sell to Glencore at any price.
Still, outside investors have the opportunity to block Teck’s separation plan at this month’s shareholder meeting. The separation requires two-thirds support from both “supervoting” and regular share classes, meaning shareholders with just a small percentage of the total voting rights could scupper Teck’s plan.
Price called Glencore’s proposal “a non-starter” and “an opportunistically timed attempt to transfer value to Glencore at the expense of Teck shareholders” during Monday’s call. He reiterated that the two companies haven’t meaningfully discussed a combination since 2020.
At the time, “the Teck Board determined not to proceed because the value to shareholders wasn’t there,” Price said. “It still isn’t.”
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