Teck Resources (TSX: TECK.A, TECK.B) (NYSE: TECK), Canada鈥檚 largest diversified miner,聽has decided to into two units 鈥� a base metals and coal 鈥斅� ahead of a shareholder vote on the proposal scheduled for Wednesday.
All other matters to be considered at the meeting remain unchanged, the Vancouver-based miner said. It added the plan forward was to pursue 鈥渁 simpler and more direct separation鈥� to best unlock value for its investors.
Chief executive Jonathan Price said that while the company received 鈥渧ery strong support鈥� from shareholders for the goal of separation, it also gathered feedback that a more direct approach to dividing up the business was preferred.
鈥淚n the interim, Teck is poised for value creation; we are ramping up our flagship QB2 copper project to full production, advancing our industry-leading pipeline of copper growth projects, and safely and responsibly optimizing production at our existing operations,鈥� Price said.聽
The executive noted that Glencore鈥檚 rejected proposals remained a non-starter. Earlier this month, the Swiss company sweetened its $23 billion unsolicited bid for Teck by offering a $8.2 billion cash incentive to shareholders.聽
The revised deal would have given Teck鈥檚 shareholders who did not want to own shares in the combined coal operation the option to receive cash plus 24% of the combined metals-focused business.
Teck鈥檚 board will focus on incorporating the feedback heard into a revised 鈥渧alue-enhancing separation鈥� to maximize value for shareholders, chair Sheila Murray said in the statement.
The move rounds off a tense three weeks of lobbying investors by both Teck and Glencore, that concluded with the Canadian mining giant not gathering the support it needed.聽
The deadline for proxy vote submissions was noon Vancouver time and requires a two-third backing from both classes of investors separately 鈥� the A Class shares, dominated by Teck鈥檚 founding , which each worth 100 votes, as well as regular B class shares, worth one vote each.聽
Price revealed during the shareholders meeting that most of them 鈥渨ould like to see a simpler and more direct separation鈥�. That, he noted, is what the company will now study. 鈥淲e鈥檒l look at a range of alternatives there with the focus on maximizing shareholder value and work through those details,鈥� he said.
The market attention will now be on Glencore, which had indicated it was ready to make a higher offer if the split did not proceed.
鈥淕lencore will view this [late withdrawal by Teck of its separation plan] as an opportunity to reassert its merger proposal, which will need to be improved to win over broad shareholder support,鈥� said Bloomberg Intelligence analysts.
The move 鈥渙pens up several new possibilities, such as an improved proposal from Glencore, a separate sales process for the coal assets, or an immediate spin of the coal business,鈥� said Nick Giles, an analyst at Lucas Pipes, told Bloomberg News.
Copper booty
Experts had anticipated that Teck鈥檚 plan to split the business in two would聽make it a takeover target. The company owns four copper mines in South America and Canada, which produced 270,000 tonnes combined last year.聽
Teck also expects to double copper output after the second phase of its Quebrada Blanca (QB) project in Chile ramps up to full capacity by the end of 2023.
Glencore believes that operating Quebrada Blanca jointly with the nearby Collahuasi mine, in which the Swiss multinational聽holds a 44% stake, would add at least a $1 billion of value to its coffers.
Top miners are hungry for copper assets as demand for the metal accelerates and a global shortfall looms. BHP, Rio Tinto and Glencore itself have disclosed that they are actively looking to grow their copper exposure.
For Glencore, which didn鈥檛 respond to 九游下载apk鈥� s request for a comment, acquiring Teck would be its biggest acquisition聽since buying Xstrata Plc in 2012聽and it would 鈥渦nlock approximately $4.25 billion 鈥� $5.25 billion of post-tax synergy value鈥�, according to the company.
Teck鈥檚 B shares were up almost 5% in New York in midday trading, at $45.68 each. The company is now worth $23.5 billion in the US (about C$31.2bn). B shares were changing hands at $61.6 each in Toronto, up almost 4.6% from the previous day close.