11th Apr 2023 13:55
(Alliance News) - Glencore PLC on Tuesday said it has offered a cash consideration to Teck Resources Ltd shareholders in a bid to get a deal over the line while soothing investor concerns on coal exposure.
Glencore, an Anglo-Swiss commodity trading and mining company, said it offered USD8.2 billion plus a 24% stake in MetalsCo to Vancouver-based miner Teck Resources. MetalsCo would be a transition metals focused business. It would differ from CoalCo, which would be a standalone coal unit.
The modified bid would "effectively buy Teck shareholders out of their coal exposure", Glencore said.
"Glencore continues to believe that CoalCo's combined thermal and coking coal assets would position it as a leading, highly cash-generative bulk commodity company which would attract strong investor demand given its yield potential. However, Glencore acknowledges that certain Teck investors may prefer a full coal exit and others may not desire thermal coal exposure," Glencore said.
Last week, Teck's board had unanimously rejected an "unsolicited and opportunistic" acquisition proposal from the Glencore.
Glencore had offered 7.78 of its own shares for each Teck Class B subordinate voting share, and 12.73 shares for each Teck Class A common share. This represented a 20% premium for both on the date of the offer.
The proposal from the commodity trader and miner would have seen it buy Teck and then separate to create two businesses, MetalsCo and CoalCo.
Glencore had said the merged company would have an estimated post-tax synergy value of between USD4.25 billion and USD5.25 billion. Glencore would have owned 76% of the merged entity under the rejected offer, with Teck owning the remaining 24%.
Teck had said that the offer was inferior to its own planned separation, which it said better positioned the resulting companies, Teck Metals and Elk Valley Resources, for success.
Glencore shares rose 2.1% to 467.10 pence each on Tuesday afternoon in London. In Johannesburg, the stock was up 2.5% at ZAR106.44.
By Tom Budszus, Alliance News reporter
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