PROTECTIONIST STATIST NATIONALISTS
Canadian Conservatives want Glencore takeover of Teck blocked
Bloomberg News | April 27, 2023 |
Image credit: Pierre Poilievre’s Facebook page
Canada’s main opposition party called for the government to block Glencore Plc’s proposed takeover of Teck Resources Ltd.
Thousands of jobs would be at risk if the Swiss commodities firm were to succeed in its unsolicited $23 billion bid for the Vancouver-based miner, Conservative Leader Pierre Poilievre said in a statement Thursday. He warned it would also mark the loss of Canada’s last remaining major diversified base-metals miner owned and headquartered in the country.
“Canada needs a government that is committed to creating and supporting Canadian jobs,” Poilievre said. “Glencore’s attempted hostile takeover will ship thousands of jobs out-of-country and threaten thousands more Canadians who work for Teck.”
The opposition leader’s announcement ups the pressure on Prime Minister Justin Trudeau to take a stand on the issue. His finance and natural resources ministers have said in recent weeks that the government is watching the deal closely.
Teck is trying to fend off Glencore’s approach. But its plan to spin off its coal business suffered a major blow Wednesday when it withdrew the proposal for lack of support, hours before it was to be put to a shareholder vote.
Shares of Teck rose 1.3% on Thursday to C$62.13 at 2:25 p.m. in Toronto, extending its gain this year to more than 22%. Glencore closed the day down 1.7% in London.
The deal is quickly becoming a broader political issue.
British Columbia Premier David Eby opposes it. And in a letter Monday to Vancouver’s board of trade, Deputy Prime Minister Chrystia Freeland said the nation needs companies like Teck in Canada as it prepares for the future of mining critical minerals key to the energy transition.
Any takeover of Teck would require the approval of the government. After a review, which could be lengthy, the final decision would mostly likely fall to Industry Minister Francois-Philippe Champagne, who signed Freeland’s letter alongside Natural Resources Minister Jonathan Wilkinson.
Canada blocked BHP Group’s proposed takeover of Potash Corp. of Saskatchewan in 2010, when Stephen Harper was prime minister. Poilievre was a member of that government.
(By Randy Thanthong-Knight, with assistance from Joe Deaux)
Glencore-led revolt kills Teck plan, keeping takeover goal alive
Bloomberg News | April 26, 2023 | 
Teck has urged investors to support its plan for splitting into two businesses (Image courtesy of Teck Resources.)
Glencore Plc’s efforts to spark an investor rebellion at Teck Resources Ltd. have succeeded, after the Canadian miner withdrew a plan to split itself in half just hours before a high-stakes vote. Now the focus shifts to whether Glencore will press its advantage with an increased takeover offer.
Teck’s rejection of Glencore’s unsolicited bid, followed by three weeks of intensive lobbying, has dramatically upset what was supposed to be a simple vote on Teck’s plan to divide its business between metals and coal. Teck chief executive officer Jonathan Price admitted the company likely didn’t have the votes it needed, sending it back to the drawing board. He’s still determined to pursue a split though, and insists the Glencore offer remains a “non starter.”
That puts the ball back in Glencore’s court. The Swiss company, which declined to comment on Wednesday, said last week it was willing to raise its bid if shareholders rejected Teck’s plan. Glencore would prefer to engage with the board first, but it also threatened to go directly to shareholders with an improved offer.
Teck and controlling shareholder Norman Keevil have repeatedly rejected Glencore’s $23 billion proposal to buy the company and then spin off the combined coal businesses, creating one of the world’s biggest metals miners in the process.
Any attempt by Glencore to circumvent Teck’s board would face significant hurdles without support from the Keevils, who have a blocking vote because they dominate the company’s “supervoting” Class A shares.
Teck investors will have an opportunity to hear from the company again today, as its shareholder meeting is still scheduled for noon Vancouver time — just without the vote on splitting the business.
The failure, for now, of that plan is a setback after the Canadian company spent four years mulling options for its steelmaking coal business before announcing a spinoff proposal in February. Teck had also raised the prospect of a sale or bidding war for its metals business after the split.
Glencore CEO Gary Nagle said previously that the company would keep pushing for a deal if the Teck spinoff plan failed. However, there was little sign on Wednesday that the Canadian miner is open to discussion. Speaking with analysts and investors after its announcement, Price said that the company is focused on working on a new plan to separate its coal business in simpler way and that it is still not interested in Glencore’s “flawed” offer.
“We will not engage on something that is a distraction from our mandate to create the greatest value with the greatest certainty for our shareholders,” he said.
Glencore had framed the vote as a referendum on its proposal, and suggested that any rejection of the Teck spinoff would demonstrate that shareholders support its approach. That was rejected by Price who said a “significant majority” supported the split between coal and metals, but just not in its current form.
The company will consider a range of alternatives to accomplish the split, the CEO said, but did not provide a time frame or further details about its options.
(By Thomas Biesheuvel and Joe Deaux)
Battle for Teck's assets just beginning as company backtracks on split: Analysts
, BNN Bloomberg
Teck Resources Ltd. may have backtracked on its plan to split its coal and metals businesses into separate companies, but analysts predict the battle for the future of its assets is just beginning.
The B.C.-based miner pulled the plug on the spinoff hours before shareholders were set to vote on the proposal – a move that indicates the company did not have the support it needed, said Laura Lau, chief investment officer at Brompton Group.
However, Lau said “investors have spoken that they would like the metals and coal assets to be split,” and questions remain about if, how and when that will happen.
“I don’t think this is done. This is just the first, second innings,” she said in a television interview with BNN Bloomberg on Wednesday.
Teck was ramping up for the vote in recent weeks while fending off an unsolicited takeover offer from Glencore Plc., a Swiss miner that wanted to buy the company as a single united entity and blend Teck’s steelmaking coal assets with its own thermal coal operations.
At the heart of the battle were tensions around environmental, social and governance (ESG) investment priorities, which place a premium on Teck’s metal assets like copper, which are used to build clean technologies like electric vehicles, and reject coal as a major source of climate change-inducing greenhouse gas emissions.
Lau, who owns shares in both Teck and Glencore, said she expects Glencore will also ultimately spin off its own coal assets to appeal to investors who want to avoid coal exposure.
She said Glencore will have a “front row seat” to purchase Teck, though the Canadian company could go to another buyer – and she said she thinks Teck is worth a higher price than the US$23 billion Glencore initially offered.
Cole Smead, president and portfolio manager at Smead Capital Management, meanwhile, said he anticipates Glencore will acquire Teck.
“I think Glencore’s going to take this sucker down,” he told BNN Bloomberg in a television interview.
Smead said he thinks the latest development in the Teck saga points to how ESG investing pressure is “not proving to be very economic.” If Glencore completes its desired acquisition, Smead said he thinks the company will be building “the most liquid coal business in the world,” because the coal has become valuable as the world tries to produce less of it.
“No one's saying how good the coal business is and nobody wants to be in the coal business, which is a way I think I can get fabulously wealthy and so can our investors and therefore we press on,” he said.
Teck CEO Jonathan Price said in a statement Wednesday that the company still considers Glencore’s proposal “a non-starter,” and the plan going forward will be “to pursue a simpler and more direct separation, which is the best path to unlock the full value of Teck for our shareholders.”
Christine Tan, portfolio manager at SLGI Asset Management, said the question about what to do with coal is a major consideration for investors in an ESG-focused environment.
She noted that Teck’s scuttled proposal would have seen profits from the coal side funnelling into the metals business for years to come, which complicated the matter for investors.
“Is it really as clean of a split as investors would like,” she said in a Wednesday interview. “Perhaps that's what management's referring to when they talk about coming back or potentially thinking about cleaner way to split the assets.”
Tan also highlighted concerns that have been raised about a foreign company buying Teck, which is considered a valuable asset for Canada’s as the country tries to position itself as a provider of critical minerals in the global energy transition.
“What does that do to the future of Teck, would be the key question for me,” she said.
Teck pulls vote on coal split, handing
momentum to Glencore
, Bloomberg News
Teck Resources Ltd. canceled a vote to spin off its coal assets hours ahead of its shareholder meeting, handing the initiative to Glencore Plc in its attempt to buy the company.
The move caps a tense three weeks of lobbying investors by both Teck and Glencore, and suggests Teck may not have mustered the support it needed. The Canadian miner rejected a US$23 billion takeover proposal from Glencore earlier this month, and said it would instead press on with the plan to spin off its coal mines, to focus on mining copper and zinc.
The focus will now turn to Glencore — which has dangled the prospect of a higher offer — and whether Teck’s own investors will pressure the company to enter discussions. While the canceled vote is an embarrassing reversal, any takeover would still require the support of controlling shareholder Norman Keevil, who holds an effective veto through Teck’s “supervoting” A Class shares.
Teck said in a statement it still intends to pursue the company split, and hasn’t changed its view on Glencore’s offer. It will consider shareholder feedback and present a new proposal. Teck shares jumped as much as 11 per cent in Toronto and traded 4 per cent higher at 12:54 p.m.
The vote on Wednesday had turned into a showdown over the future of Teck — Glencore said its proposal would be dead if the spinoff were approved, as it tried to persuade shareholders to vote “no” and pressure the company to engage. A Glencore spokesman declined to comment on Teck’s announcement.
The Swiss commodities giant wants to buy Teck and then create two new companies from their combined metals and coal businesses. The deal would offer control of Teck’s lucrative copper mines at a time when the world is worrying about a shortage, and also allow Glencore to get out of the profitable yet polluting thermal coal business. But the takeover fight also has wider significance in the global mining industry, marking a public return to large-scale mergers and acquisitions by the world’s biggest producers after years on the sidelines.
“Glencore’s rejected proposals remain a non-starter, with the same flawed structure and material execution risks identified by our board,” said Teck Chief Executive Officer Jonathan Price. “Our plan going forward is to pursue a simpler and more direct separation, which is the best path to unlock the full value of Teck for our shareholders.”
Teck had proposed creating a new steelmaking coal company, called Elk Valley Resources, that would continue to pay a royalty to its remaining metals business for several years. The ongoing link between the two companies would have muddied its appeal for investors who no longer wanted exposure to coal.
Glencore, by contrast, had offered to pay cash to buy Teck investors out of their exposure to the companies’ combined coal businesses.
OPENS POSSIBILITIES
The canceled vote “opens 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,” B. Riley Securities analysts Lucas Pipes and Nick Giles wrote in a note.
Teck, which has repeatedly rejected Glencore, had said it would be prepared to discuss takeover offers for its metals business after the spinoff, and even raised the prospect of a bidding war. However, the board’s position suffered a blow when two influential shareholder advisory firms, Glass Lewis and Institutional Shareholder Services, both recommended votes against the Teck plan.
Teck will consider a range of alternatives for how best to split off its coal assets, Price said on a call with analysts, but declined to provide a timeframe.
“We will not engage on something that is a distraction from our mandate to create the greatest value with the greatest certainty for our shareholders,” Price said.
The shareholder meeting is still scheduled for noon in Vancouver today. The resolution on the split required two-thirds approval from both classes of shareholders separately — the A Class “supervoting” stock dominated by Teck’s founding Keevil family, as well as regular B class shares. While several smaller investors had come out for or against Teck’s plan, the company’s largest shareholders have not made their position public.
China’s sovereign wealth fund, China Investment Corp., is the biggest holder, with about 10 per cent, followed by BlackRock Inc. and Dodge & Cox.
“The late withdrawal by Teck of its separation plan from today’s AGM appears to reflect significant shareholder concerns that the plan is too complicated,” said Bloomberg Intelligence analysts. “Glencore will view this climbdown as an opportunity to reassert its merger proposal, which will need to be improved to win over broad shareholder support.”
Teck spinoff backed by Canada pension after website error fixed
Bloomberg News | April 25, 2023
Greenhills is one of the five steelmaking coal operations Teck Resources has in the Elk Valley, British Columbia. (Image courtesy of Teck Resources.)
Canada’s largest pension fund says it will vote for Teck Resources Ltd.’s plan to split the mining company after a “technical error” last week caused it to state the opposite.
Canada Pension Plan Investment Board, which managed C$536 billion ($394 billion) at the end of December, will endorse a plan to spin off Teck’s steelmaking coal business at an April 26 shareholder meeting, it confirmed on Tuesday.
Last week, the pension fund’s website stated it would vote against the proposal. A CPPIB spokesperson said incorrect information was posted due to a technical error.
The vote has been framed by Glencore Plc., which is seeking to buy Teck, as a referendum on whether the board of the Canadian company should abandon the split and engage in talks. The companies have spent the past few weeks in a bruising fight to win over Teck investors, after its board and controlling shareholder publicly rejected Glencore’s proposal. The Swiss commodities giant offered to buy Teck for $23 billion and then create two new companies by combining their respective metals and coal businesses.
Teck’s controlling shareholder, Norman Keevil, has signaled that he’d support a transaction with the “right partner, on the right terms” after the firm separates its metals business from its coal operations.
CPPIB owned 1.15 million of Teck’s Class B shares, or 0.23%, as of Dec. 31, according to data compiled by Bloomberg.
(By Paula Sambo)
Reuters | April 24, 2023 |
Canada’s Foreign Minister Chrystia Freeland. Photo by Freeland’s press office
Teck Resources, which is trying to fend off an unsolicited $22.5 billion takeover offer from Glencore Plc, should remain headquartered in Canada and help the country expand its critical minerals industry, Finance Minister Chrystia Freeland said on Monday.
Freeland’s comments were the clearest indication to date that Ottawa is closely watching the takeover battle between Vancouver-based Teck and Switzerland’s Glencore because of Teck’s interests in copper and other metals critical to a green energy transition.
“We need companies like Teck here in Canada, companies with a strong commitment to Canada,” Freeland wrote in a letter seen by Reuters to the Greater Vancouver Board of Trade, which has concerns about Teck’s future in Canada.
After Freeland’s comment, Glencore pointed out to its April 3 letter where it has said its deal “would not materially change the day-to-day operations at Teck’s assets in Canada. It will honour all of Teck’s commitments to local Canadian communities as well as to Indigenous communities to ensure their interests are acknowledged and protected”.
Teck did not respond to an email request for comment.
Separately, Teck’s institutional shareholders were due to vote by 3 p.m. ET on Monday on a Teck proposal to split its coal and metals businesses, with results released on Wednesday.
Glencore has said that there is no deal if shareholders vote in favor of Teck’s split. Canada’s largest pension fund CPPI voted against the split over the weekend then changed its vote to favor the move, according to its website.
China Investment Corporation (CIC), the largest holder of Teck’s common stock, has not disclosed how it voted.
Large investors such as the Norwegian government pension fund, asset managers Janus Henderson and Letko Brosseau and Teck mining partner Sumitomo Metals have said they will vote in favor of the split.
Proxy advisory firms Glass Lewis and ISS have recommended shareholders oppose dividing Teck, and Toronto-based Waratah Capital Advisors has said it voted against the move.
(Reporting by Divya Rajagopal and Steve Scherer; Editing by Ernest Scheyder, Marguerita Choy and Cynthia Osterman)
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