Teck Resources Ltd. confirmed Monday it is engaging with Glencore around its proposal to buy Teck's steelmaking coal business, the latest development in what has been a months-long battle over the future of Canada's largest diversified mining company.
Vancouver-based Teck said in a statement that Glencore's offer is one of several "unsolicited indications of interest" the company has received from different parties regarding its coal business.
Teck said Glencore's proposal is "preliminary in detail, conditional and non-binding" and is being evaluated along with all other offers by Teck's board and an independent special committee.
"The high degree of interest expressed by a wide range of parties underscores the value of Teck’s high-margin, long-life steelmaking coal assets," the company said in its statement, adding that just because it is engaging with interested parties does not mean a transaction will take place.
"Teck does not intend to provide any further updates until it determines that a disclosure is required," the company stated.
Swiss commodities giant Glencore first launched its $25-billion hostile takeover bid for Teck Resources earlier this spring, when the Vancouver-based company was in the midst of its own restructuring effort.
Teck has been working to split its coal assets from its base metal operations, in the hope of expanding its copper and zinc production to meet growing global demand for these metals, both of which are used in the production of electric vehicles and are considered to be key resources for the coming energy transition.
But the in April company called off a shareholder vote on its plan to spin off its steelmaking coal operations into a separate company after it became apparent it did not have the required support for the proposal and instead said it would pursue an alternative, more simplified split.
The move was widely seen as a win for Glencore, whose initial offer for Teck was rejected by the company's board. Glencore had lobbied for shareholders to vote against Teck's spinoff proposal, saying it could not pursue its own hostile takeover bid if Teck's plan to separate its businesses went ahead.
On Monday, Glencore issued a new statement confirming that it has submitted a new offer to Teck's board, this time proposing to acquire the steelmaking portion of the company's business for an undisclosed amount of cash.
The Swiss company said it remains willing to pursue its offer for all of Teck, but that it has made an alternative offer for the coal operations that it would combine with its own thermal coal assets.
"We also note continued strong support from shareholders for a transaction between Glencore and Teck," Glencore said in its statement.
The company said it is "fully committed" to ensuring an acquisition of the coal business would benefit Canada and that it is open to working with Teck "to identify a comprehensive suite of commitments for the benefit of all relevant stakeholders."
Other potential suitors who may have submitted expressions of interest could include a consortium of Teck's Japanese shareholders, as well as a larger miner looking to consolidate and spin out the company's coal assets, said Cole Smead, of Smead Capital Management.
But he added he believes that Glencore has the "cleanest offer."
"Glencore is still the lead bidder, without a doubt," Smead said. "They are the only company that has put a firm price and multiple out there."
The unsolicited pursuit of what is Canada's largest diversified mining company by an international giant has triggered sentiments of economic nationalism. Some observers have pointed out Glencore's pursuit of the Canadian company comes at the same time that the government has committed to a national critical minerals strategy as part of its overall climate plan.
B.C. Premier David Eby, the Mining Association of B.C., as well as the Greater Vancouver Board of Trade have expressed concern over the potential for job losses and cast doubt upon Glencore's ESG record.
Any merger of the two companies would have to be approved by the federal government. Opposition Leader Pierre Poilievre has called for the government to block any hostile takeover attempt.
Industry Minister Francois-Philippe Champagne has stopped short of a commitment but has spoken publicly about Teck's value as a Canadian company.
Teck is controlled by the Keevil family, which owns the company's Class A shares together with Japanese company Sumitomo Metal Mining Co. Ltd.
This report by The Canadian Press was first published June 12, 2023.
Companies in this story: (TSX:TECK.B)
Amanda Stephenson, The Canadian Press
