Global miner Glencore said yesterday that it was willing to consider making improvements to its $23 billion (R400bn) proposal for a merger with Teck Resources if they could meet and talk as the Teck board had refused engagement.
In late intraday trade Glencore’s shares on the JSE were 11,145 -0.87% lower at R111.45.
In an open letter directed at the Teck shareholders, Glencore CEO Gary Nagle said the miner had never stated that its proposal was “best and final” and that it was not willing to make changes and improvements to its proposal.
This comes after Teck Resources unanimously rejected Glencore's bid for the Canadian miner. Teck said the offer was an unsolicited and opportunistic acquisition proposal from Glencore plc. The miner instead said it wants to continue with its own plan to split into a coal company and a metals business.
The offer is the largest acquisition attempt by the largest coal miner since its merger with Xstrata in 2013.
Teck describes itself as among Canada’s leading mining companies and says it is committed to responsible mining and mineral development, with major business units focused on copper, zinc and steelmaking coal.
In its proposal, Glencore suggested a separate company, MetalsCo, which would include Glencore and Teck’s industrial metals businesses, as well as the London-listed company’s oil trading division.
Teck shareholders will meet on April 26 to vote on whether to back the split.
Meanwhile, yesterday Glencore said under its revised proposal, it would also include a cash component, to buy shareholders out of their coal exposure such that Teck shareholders would receive up to $8.2bn in cash or 24% of CoalCo.
“We continue to believe that the Proposed Merger Demerger being a merger and not a takeover, is demonstrably superior to the Proposed Teck Separation. It provides the most compelling value proposition to Teck shareholders, who would fully and disproportionately participate in the value creation, synergies, and upside,” Nagle said.
He said the cash alternative to CoalCo shares would also provide investors who are not able/prefer not to hold pureplay coal exposure with certain liquidity, at an attractive valuation, immediately upon demerger.
“Glencore’s proposal will stand, and Glencore is willing to make an offer directly to shareholders if there is no engagement,” Nagle said.
Nagle said Glencore’s proposal would stand and remain valid if Teck delayed its shareholders’ meeting or Teck shareholders vote down the Proposed Teck Separation on April 26, 2023.
“Glencore is willing to make an offer directly to Teck shareholders if the Proposed Teck Separation does not proceed, and Glencore believes that this is required where there continues to be no engagement from the Teck Board.
“We note that proxy advisers have recommended that Teck meets with Glencore to explore improvements or refinements to our proposal and Teck has responded to the effect that there is no purpose to this engagement as Glencore is fixed and final in its position, which has never been the case,” Nagle said.
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