5th Jul 2024 11:52
(Alliance News) - The completion of Glencore PLC's acquisition of a 77% interest in Elk Valley Resources could prompt "meaningful upgrades", an analyst said.
On Friday, the Barr, Switzerland-based miner and commodity trader said it has received regulatory approval for the deal from Canada.
It said the Canadian approval is the final hurdle for the transaction, which is now expected to close on Thursday next week.
Glencore's is buying the steelmaking coal business from Teck Resources Ltd for USD6.93 billion in cash.
"We are pleased to have received final regulatory approval for the transaction and look forward to completing the acquisition and welcoming EVR into the Glencore Group," Chief Executive Officer Gary Nagle said.
"Glencore's Canadian assets form a significant part of our global business, and some have a history that dates back more than 100 years. The investment in EVR will further support our position as one of the largest diversified miners and suppliers of critical minerals in Canada," Nagle said.
Glencore clinched its acquisition of Elk Valley back in November following a bitter public battle over Teck's coal assets.
Panmure Liberum said it, along with other market participants "had been getting concerned that the Glencore guidance of [third quarter 2024] for deal close was looking optimistic, and we did not have tonnes coming through till start of next year."
Moving forward the acquisition by six months would add 6 pence to its price target, the broker estimated.
"Many analysts across the street were waiting to add Teck coal assets to the model only once approval was achieved and so could see more meaningful upgrades across the street," Panmure Liberum suggested.
The acquisition, net of costs, adds USD2.6 billion to its valuation or 3.8% uplift in shares.
The broker has a 'hold' rating on Glencore.
Shares in Glencore rose 0.8% to 484.70 pence each in London on Friday. In Johannesburg, they were 0.9% higher at ZAR112.68 each.
By Jeremy Cutler, Alliance News reporter
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