Glencore (LON: GLEN) raised on Wednesday the prospect of improving its $23.1bn takeover聽bid for Teck Resources (TSX: TECK.A, TECK.B) (NYSE: TECK), provided that shareholders reject the Canadian miner鈥檚 plan to split the company in two next week.
In an addressed to Teck鈥檚 Class B shareholders, who own almost all the equity but few of the votes, Glencore chief executive officer Gary Nagle said his company was open to talk improvements to its proposal directly with Teck shareholders if the board continues to rebuff its offer.
鈥淕lencore has never stated that its proposal is 鈥榖est and final鈥� and that is it not willing to make changes and improvements to its proposal,鈥� , adding the company would make an offer directly to Teck shareholders 鈥渋f the proposed Teck separation does not proceed鈥�.
Nagle warned that any potential future offers for spinoff metals unit Teck would likely look very different, given the friction costs, the complexity of the two companies, the time delay involved and the impact of two new management teams and boards.
Nagle also said that the Teck board had 鈥渃onsistently refused any engagement.鈥�
鈥淲e believe that with engagement, we could improve our proposal鈥檚 terms and value, which would be in the best interests of all Teck shareholders,鈥� he wrote.
The Canadian company by saying that Teck has previously engaged 鈥渆xtensively鈥� with Glencore 鈥� for six months on essentially the same proposal 鈥� and repeatedly determined it is not in the best interest of its shareholders.
Glencore鈥檚 letter comes exactly one week ahead of the Teck vote on splitting the company into two 鈥� a base metals unit and a metallurgical coal miner. To pass, the motion requires two-thirds approval by both Class A and Class B shareholders.聽
Nagle landed in Toronto last week to personally explain his company鈥檚 vision and intentions, resulting in two influential shareholder advisory firms 鈥� ISS and Glass Lewis 鈥� recommending against Teck鈥檚 strategy.
His visit also triggered Teck chairman emeritus,聽Norman聽Keevil, to publish an saying he wasn鈥檛 against deals with other companies, provided they were with 鈥渢he right partner鈥� and 鈥渙n the right terms鈥� after the Teck splits its base metals and coal businesses.
His comments were followed by CEO Jonathan Price鈥檚, who expressed confidence in Teck鈥檚 biggest B-shareholder, China Investment Corp., voting for the proposed split. CIC owns 10% of the class B shares.
No 鈥渇oreign predators鈥�
Even Canadian mining legend Robert Friedland has come out in defence of Teck. The billionaire urged the Canadian government and regulators to protect Teck from 鈥渇oreign predators鈥� and to ensure that strategic resources, particularly copper and zinc, remain in local hands.
Glencore鈥檚 initial bid represented a 20% premium to Teck鈥檚 March 26 closing price, when it was privately made.
JP Morgan analysts this week said that Glencore could pay as much as $27.2 billion.
The Vancouver-based miner鈥檚 shareholders will vote on the proposal to split up its metal and steelmaking coal businesses into two companies, Teck Metals and Elk Valley Resources, on April 26.