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Teck Resources Ltd denied on Wednesday it had refused to engage Glencore PLC on its proposed ‘merger’, maintaining the offer was ‘not a realistic or viable’ option for the New York-listed mining group. In an open letter to its shareholders, Teck said on Wednesday Glencore complained that Teck had refused to engage, which ‘is simply not true’. Glencore’s ‘opportunistic’ offer had not changed and was ‘same low value, same flawed structure, same material execution risks’. The Vancouver-based miner saw reacting to Glencore’s dramatic move to urge Teck shareholders to take action to support engagement on its proposal. In its own open letter published on Wednesday, Glencore also hinted it might improve the offer. At the centre of the takeover bid that has gone public are highly coveted copper assets Teck owns. Glencore wants to buy Teck and then separate it to create two businesses, MetalsCo and CoalCo. Last week, Glencore revised its offer, adding a cash element of $8.2 billion plus a 24% stake in MetalsCo to Vancouver-based miner’s shareholders. MetalsCo would be a transition metals focused business. It would differ from CoalCo, which would be a standalone coal unit. Teck shareholders could opt for CoalCo shares instead of the cash and would own up to 24% of it if all did. Early this month, 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. If the deal succeeds, Glencore would have owned 76% of the merged entity, with Teck owning the remaining 24%. In its letter, Teck stuck to its proposed separation plan, which would result companies, Teck Metals and Elk Valley Resources. Teck said in the letter its board had ‘carefully’ reviewed the two recent and substantially similar proposals from Glencore, both of which it rejected. ‘We clearly communicated our concerns and rationale for rejecting the proposals in letters to the Chairman of Glencore’s board,’ it said. Teck said it had previously engaged extensively with Glencore - for six months on essentially the same proposal - and repeatedly determined it is not in the best interest of Teck shareholders. ‘The choice for shareholders is clear: vote FOR Teck’s separation plan to create the world’s pre-eminent, pure-play base metals company with a greater array of value creating opportunities,’ Teck said. Glencore’s proposed transactions were only slightly modified from its proposal from 2020, which ‘we engaged on with Glencore for over six months before determining it’, the Teck letter said. Further discussions in late 2022 and early 2023 confirmed Glencore’s proposal remained essentially unchanged. ‘Glencore’s proposal is complex, ill-defined, with the risk of substantial tax impacts, and value loss for our shareholders if it were to proceed. It also carries significant execution risk, requiring extensive regulatory approvals, and would not close for up to two years, if ever,’ Teck said. ‘In contrast, Teck’s pending separation will be completed in as little as six weeks.’ Teck said in the letter the premium in Glencore’s proposal continues to undervalue the company, and did not reflect the value of the base metals portfolio that will be unlocked by the creation of Teck Metals. Glencore shares lost 0.7% to 494.45 pence each on Wednesday in London. It has a market capitalisation of £62.10 billion. In Johannesburg, the stock was down 1.1% at R 111.20. Teck Resources shares were up 0.2% to $48.19 in the New York on Wednesday. It has a market cap of $24.98 billion. Copyright 2023 Alliance News Ltd. All Rights Reserved.
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