Glencore’s pitch puts Teck’s future in doubt
Glencore and Teck first talked marriage three years ago, Mr. Nagle said in a press conference on Monday, but could never reach agreement on terms. He said the latest bid is a “significant” improvement on past offers. Glencore also held out the possibility of further increasing the price if Teck’s board is willing to engage in talks.
With an eye to potentially gaining government approval, Glencore made a string of Canada-friendly promises, including a pledge to headquarter operations in either Vancouver or Toronto. Those details will matter in Ottawa. For the investors who will decide Teck’s future, Mr. Nagle won hearts simply by saying 20-per-cent premium.
Glencore is betting the prospect of a better offer will entice Teck class-B shareholders to vote against the planned Elk Valley spin-out. Glencore can also pressure Sumitomo and CIC to turn down the plan – Mr. Nagle said the Swiss company has strong relationships with both entities. Until Glencore went public on Monday, the vote on Teck’s restructuring seemed a foregone conclusion. Investors didn’t love the concept, but in the absence of an alternative, they would support splitting up the company, a prospect sweetened by the Keevil family’s pledge to get rid of Teck’s dual-class structure in six years, if the creation of Elk Valley is approved.
The landscape is now completely different. In Glencore, Teck shareholders have a potentially lucrative option to the spin-out. In an open letter in Monday, Teck chair Sheila Murray, a veteran corporate lawyer, listed a host of problems with Glencore’s plan and dismissed the proposal as “opportunistic.” She’s right. And Canadian mining history is filled with successful, opportunistic takeovers.
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