3rd Apr 2023 13:51
(Alliance News) - New York-listed Teck Resources Ltd on Monday said that it had received and its board unanimously rejected an "unsolicited and opportunistic" acquisition proposal from Glencore PLC.
Glencore 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.
Glencore said the merged company would have an estimated post-tax synergy value of between USD4.25 billion and USD5.25 billion. Glencore would own 76% of the merged entity under the offer, with Teck owning the remaining 24%.
The proposal from the commodity trader and miner would see it buy Teck and then separate to create two businesses, MetalsCo and CoalCo.
Glencore said it wants to create MetalsCo, a "standalone transition metals focused business", and CoalCo, a standalone coal and carbon steel materials business. It added that MetalsCo would have generated USD16 billion of proforma earnings before interest, tax, depreciation and amortisation in 2022, while CoalCo would have generated about USD26 billion that year.
"Each of MetalsCo and CoalCo would be uniquely positioned within their respective peer groups from an asset quality, scale and diversification perspective, to provide their shareholders with highly liquid exposure to Tier 1 assets and, in the case of MetalsCo, a leading growth pipeline. Glencore and Teck shareholders would be well positioned to participate in a valuation re-rating over time," Glencore said.
However, Teck noted that Glencore's proposal would introduce oil exposure into the merged base metals business, reversing the steps it has taken to exit oil.
Teck 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.
It also said that the spun-out business envisioned by Glencore would be a majority thermal coal business, contrary to the global decarbonisation agenda. Teck said this would force shareholders to hold "massive thermal coal exposure", which it believed would be "value destructive".
Glencore shares were down 3.6% to 447.70 pence each in London on Monday afternoon, giving it a market capitalisation of GBP56.62 billion.
Teck shares closed flat at USD36.50 each in New York on Friday, giving it a market capitalisation of USD18.94 billion. The stock was up 11% in pre-market dealings at USD40.50 each on Monday.
By Holly Beveridge and Tom Budszus, Alliance News reporters
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Glencore