Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK)
(“Teck”) today announced that the Board of Directors of Teck has
received and unanimously rejected an unsolicited and opportunistic
acquisition proposal from Glencore plc, which would see that
company acquire Teck and subsequently separate to create two
businesses, which would expose Teck shareholders to thermal coal
and oil trading.
“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, Chair of the Board, Teck.
“The Special Committee and Board remain confident that the proposed
separation into Teck Metals and Elk Valley Resources (EVR) is in
the best interests of Teck and all its stakeholders, is a much more
compelling transaction and does not limit our optionality going
forward.”
“The Glencore proposal would expose Teck
shareholders to a large thermal coal business, an oil trading
business and significant jurisdictional risk, all of which would
negatively impact the value potential of Teck’s business, is
contrary to our ESG commitments and would transfer significant
value to Glencore at the expense of Teck shareholders,” said
Jonathan Price, CEO, Teck.
Consistent with its fiduciary duties and in
consultation with its financial and legal advisors, Teck’s Board of
Directors has conducted a detailed review and assessment of the
unsolicited proposal and, on the recommendation of the independent
Special Committee of the Board, has determined that the proposal is
not in the best interests of Teck or its shareholders. The Board
strongly believes the separation plan that Teck has proposed, which
will create two world-class Canadian companies, provides a superior
opportunity to maximize value for all Teck shareholders.
Furthermore, the unsolicited proposal introduces significant
timing, regulatory and other execution risks, particularly as
compared to Teck’s own planned separation.
The unsolicited proposal contemplates an
all-share acquisition of Teck by Glencore offering 7.78 Glencore
shares for each Teck Class B subordinate voting share and 12.73
Glencore shares for each Teck Class A common share, which
represented a 20% premium for both on the date of the offer. The
proposal notes an intention to proceed with the simultaneous (or
near simultaneous) demerger of the combined thermal and
metallurgical coal as well as the ferro-alloy operations of the
merged company into a new publicly traded company. The remaining
company would include Glencore’s and Teck’s base metals operations
as well as Glencore’s oil and other commodity trading business
(other than coal trading and marketing).
In making its determination to reject the
unsolicited proposal and concluding that the proposal is inferior
to Teck’s own planned separation, Teck’s independent Special
Committee and Board considered numerous factors, including the
following:
- The Teck Board is not
contemplating a sale of Teck at this time: If the Board
were to engage in a sale process, it would undertake a disciplined
process to determine the most compelling transaction for Teck’s
shareholders. Teck’s proposed separation positions the resulting
companies, Teck Metals and EVR, for success and does not foreclose
future opportunities for other value enhancing transactions.
- Opportunistically
timed: The unsolicited proposal is an opportunistically
timed attempt to transfer value to Glencore shareholders at the
expense of Teck shareholders. It comes as Teck is ramping up its
flagship QB2 copper project (which announced first copper March 31,
2023) and poised to implement its separation plan to create two
world-class, pure-play companies and realize the full potential of
each business for shareholders.
- High execution
risk: The Glencore proposal has a very high level of
complexity and execution risk based on the number of jurisdictions,
commodities and complex approvals required from various competition
and regulatory bodies, which could take up to 24 months to resolve.
This results in a high degree of execution uncertainty. In
comparison, Teck’s planned separation has all regulatory approvals
in place and, following shareholder approval on April 26, 2023,
closing is expected on May 31, 2023, allowing Teck shareholders to
begin to realize the substantial benefits of the separation in the
very near term.
- Thermal coal
exposure: The spun-out business envisioned by Glencore
would be a majority thermal coal business of an unprecedented
scale. Thermal coal mines are contrary to the global
decarbonization agenda. The Glencore proposal would force Teck
shareholders to hold massive thermal coal exposure, which would be
value destructive, drive away current and future investors who
cannot hold thermal coal assets, and result in Teck’s world-class
steelmaking coal business trading at a discount.
- Oil trading
exposure: The Glencore proposal would introduce oil
exposure into the merged base metals business, which would reverse
the steps Teck has taken to exit the oil business.
In a letter dated today, Teck communicated its
response to Glencore. A copy of Teck’s letter can be found here:
click here.
Teck’s Board continues to recommend that
shareholders approve the previously announced reorganization of
Teck’s business and the previously announced proposal to introduce
a six-year sunset for the multiple voting rights attached to the
Class A common shares of Teck, among other items of business, at
the annual and special meeting of shareholders on April 26, 2023.
The management proxy circular providing more information on these
proposals and voting procedures will be available at
www.teck.com.
AdvisorsBarclays Capital Canada
Inc. and Ardea Partners LP are serving as financial advisors to
Teck. Stikeman Elliott LLP and Paul, Weiss, Rifkind, Wharton &
Garrison LLP are acting as legal advisors.
BMO Capital Markets, Goldman Sachs & Co.
LLC, and Origin Merchant Partners are serving as financial advisors
to the Special Committee and Blake, Cassels & Graydon LLP and
Sullivan & Cromwell LLP are acting as legal advisors to the
Special Committee.
About TeckAs one of Canada’s
leading mining companies, Teck is committed to responsible mining
and mineral development with major business units focused on
copper, zinc, and steelmaking coal. Copper, zinc and high-quality
steelmaking coal are required for the transition to a low-carbon
world. Headquartered in Vancouver, Canada, Teck’s shares are listed
on the Toronto Stock Exchange under the symbols TECK.A and TECK.B
and the New York Stock Exchange under the symbol TECK. Learn more
about Teck at www.teck.com or follow @TeckResources.
Cautionary Note Regarding
Forward-Looking StatementsThis news release contains
certain information which constitutes “forward-looking statements”
and “forward-looking information” within the meaning of applicable
Canadian securities laws. Any statements that are contained in this
news release that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking statements
are often identified by terms such as “may”, “should”,
“anticipate”, “expect”, “potential”, “believe”, “intend” or the
negative of these terms and similar expressions. Forward-looking
statements in this news release include, but are not limited to:
statements regarding Teck’s planned separation transaction,
including the timing thereof, and Teck’s expectations regarding the
impacts of any such transaction in terms of creating value for
shareholders; statements related to anticipated risks of Glencore’s
proposal, including with respect to execution, timing and exposure
to thermal coal and oil trading, and Teck’s assessment thereof as
compared to its own planned separation transaction; statements
related to the opportunity for future transactions involving Teck
Metals or EVR; statements regarding timing and production levels of
Teck’s QB2 copper project; statements regarding Teck’s expectations
regarding ESG commitments and decarbonization trends; and
statements with respect to Teck’s business and assets and its
strategy going forward. Readers are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements
involve known and unknown risks and uncertainties, most of which
are beyond the Teck’s control. Several factors could cause actual
results to differ materially from those expressed in the
forward-looking statements, including, but not limited to: future
actions taken by Glencore in connection with its unsolicited
proposal; fluctuations in supply and demand in steelmaking coal,
base metals and specialty metals markets; changes in competitive
pressures, including pricing pressures; timing and receipt of
requisite shareholder and court approvals; the recent global
banking crisis and conditions and changes in credit markets;
changes in capital markets; changes in currency and exchange rates;
changes in and the effects of, government policy and regulations;
and earnings, exchange rates and the decisions of taxing
authorities, all of which could affect effective tax rates.
Additional risks and uncertainties can be found in our Annual
Information Form dated February 21, 2023 under “Risk Factors”.
Should one or more of the risks or uncertainties underlying these
forward-looking statements materialize, or should assumptions
underlying the forward-looking statements prove incorrect, actual
results, performance or achievements could vary materially from
those expressed or implied by the forward-looking statements.
The forward-looking statements contained herein are made as of
the date of this release and, other than as required by applicable
securities laws, the Company does not assume any obligation to
update or revise them to reflect new events or circumstances. The
forward-looking statements contained in this release are expressly
qualified by this cautionary statement.
Investor Contact:Fraser PhillipsSenior Vice
President, Investor Relations & Strategic
Analysis604.699.4621fraser.phillips@teck.com
Media Contact:Chris Stannell Public
Relations Manager604.699.4368chris.stannell@teck.com
Teck Resources (TSX:TECK.A)
Historical Stock Chart
From Jun 2024 to Jul 2024
Teck Resources (TSX:TECK.A)
Historical Stock Chart
From Jul 2023 to Jul 2024