LONDON (Reuters) -Teck Resources Ltd on Monday rejected an unsolicited $22.5 billion bid from Swiss mining and trading company Glencore Plc, sending the U.S.-listed shares of the Canadian copper miner up about 10% in premarket trading.
Glencore’s all-share offer comes at a 20% premium to the closing stock price of Teck on March 26, when the bid was made, proposing a simultaneous spin-off of their thermal and steelmaking coal businesses.
The $19-billion Canadian company, however, said a potential split would expose its shareholders to a large thermal coal business, an unwanted oil trading business and significant jurisdictional risk, all of which would negatively impact its value.
Teck said more value can be created with the proposed restructuring announced earlier this year than the sale of the company.
“The board is not contemplating a sale of the company at this time,” Teck Chair Sheila Murray said in a letter to the board of Glencore.
Teck said in February it would spin off its steelmaking coal unit to focus on industrial metals, such as copper.
After the separation, the company will re-brand itself as Teck Metals Corp, while the new divested unit will be listed in Toronto as Elk Valley Resources Ltd.
“We view the Glencore offer as an opportunistic bid designed to take advantage of the current dislocation in Teck shares related to the proposed near-term business separation,” analysts at Scotiabank said.
“Given the (Keevil) family control of Teck’s A shares, we view the likelihood of a successful transaction with Glencore as extremely low, even in the event of an improved offer,” they added.
Glencore’s London-listed shares were down 2% by 1340 GMT.
The Keevil family’s control of Teck through their dominant ownership of ‘A’ class of shares, which have more voting power than the numerous ‘B’ class shares held by institutions, could make any further merger discussion hard.
“I unequivocally support the Board’s decision to reject Glencore’s unsolicited offer to acquire Teck,” said Norman Keevil, chairman emeritus of Teck Resources in a statement.
“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 …shareholders after the separation.”
(Reporting by Clara Denina, Ankit Kumar, Mrinalika Roy; Editing by Dhanya Ann Thoppil, Arun Koyyur and Tomasz Janowski)
