Glencore bids for Canadian rival Teck’s coal business

Glencore plunges into a Canadian rival’s coal business in a new spin on one of the industry’s biggest takeover battles in decades.

The FTSE 100 mining giant said it has offered to buy Teck Resources’ coal arm for cash in a bid to combine the company with its own coal operations.

Glencore would then separate the merged entity into a separate company within two years of closing the deal.

Teck’s coal arm makes coking coal used in steelmaking, while Glencore’s controversial thermal coal trade is considered one of the world’s nastiest fossil fuels.

Glencore has been battling to buy all of Teck, with boss Gary Nagle previously saying buying just the coal arm would be a “distant second” to a full takeover.

Teck, which is also active in copper and zinc mining, said it was “intervening” in Glencore’s latest move, but stressed it was only “one of a number of proposals being considered.”

Glencore previously offered to buy the entire company for £18.3 billion in a cash-and-share deal that valued the coal arm at £6.5 billion.

The advances have been repeatedly rejected by Teck’s executives, who previously labeled the takeover proposal as a “non-starter.”

But Glencore has steadily increased the pressure after threatening to stage a hostile takeover by taking its proposal directly to investors.

Teck’s leadership originally planned to split its own company into two, focusing on coal and metal mining, respectively.

But they reversed in April when it failed to receive investor support, strengthening Glencore’s hand.

Reports also emerged last month that Glencore may be softening its company-wide offer in an effort to close a deal.

But it encounters several hurdles in pursuit of Teck, which has led to opposition from the Canadian government and the mining industry.

Any takeover would come under heavy scrutiny from officials in Ottawa, who can block deals and have recently cracked down on foreign investment in the mineral industry.

Glencore also faces Norman Keevil, 84, a Canadian magnate whose shares in Teck give him effective veto power over any takeover.

His vociferous rejection of the offer angered some investors and he has since softened his tone.

Glencore’s plans to spin off its coal business come amid mounting criticism of the company’s strategy to reduce greenhouse gas emissions.

“There is a merry-go-round of coal assets in the industry as companies don’t want to be left with what is perceived as dirty fuel,” said AJ Bell investment director Russ Mold.