Vancouver’s Teck Resources Limited (TSX: TECK.A and TECK.B) (NYSE: TECK) has rejected an unsolicited acquisition offer of $22.5 billion from Switzerland’s mining giant Glencore plc (LON: GLEN).
The company announced the decision from its board of directors on Monday and says the proposed acquisition would have transferred substantial value to Glencore at the expense of Teck’s shareholders.
Teck is currently in the process of splitting its company into two separate businesses — Teck Metals and Elk Valley Resources (EVR). Teck Metals will be focused on critical minerals like copper and zinc and EVR will be solely concerned with producing metallurgical coal used for making steel.
The company says the split-up will be concluded by the end of May this year and according to local media, a former premier of British Columbia will be joining the coal subsidiary’s board.
John Horgan is joining the board of Elk Valley Resources, an enterprise that is in the process of being spun off from Vancouver-based Teck Resources https://t.co/j1WOP7UzAA
— Vancouver Is Awesome (@VIAwesome) April 3, 2023
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Teck says its board believes the split-up is a much more efficient means of generating profit and shareholder value than selling the company.
“The board is not contemplating a sale of the company at this time. We believe that our planned separation creates a greater spectrum of opportunities to maximize value for Teck shareholders,” said Sheila Murray, Teck’s Chair of the Board.
Teck also believes the takeover proposal was an opportunistically timed attempt to transfer value to Glencore’s shareholders at its own expense and that there would be a variety of risks and complications involved with that transaction which could take up to two years to resolve.
“I remain fully committed to Teck’s proposed transaction to create two world-class, well-focused, independent companies and I unequivocally support the board’s decision to reject Glencore’s unsolicited offer to acquire Teck,” said Norman Keevil, Chairman Emeritus of Teck Resources.
“Now is not the time to explore a transaction of this nature, and I have the utmost confidence in the board’s and our management teams’ strategy to maximize value for each of Teck Metals’ and EVR’s shareholders after the separation.”
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Teck also announced on Friday that it had produced the first bulk copper concentrate at its QB2 project in Chile. The company expects the operation to generate between 285,000 – 315,000 tonnes of copper annually between 2024 – 2026.
“First copper concentrate production at QB2 is an important milestone as we advance our commissioning and ramp up plan towards full production this year,” said Jonathan Price, CEO of Teck Resources.
Teck’s stock price rose significantly Monday by 17.35 per cent to $57.91 on the Toronto Stock Exchange.
Glencore’s stock rose by 1.15 per cent Monday to the equivalent of $7.81 on the London Stock Exchange.