Glencore accused of ‘illogical’ takeover: Activist accuses miner of ‘short-sightedness’ and ‘complacency’ over ‘value-destroying’ deal
Glencore has been criticized by an activist shareholder when its bid to buy a Canadian rival suffered another setback.
In a letter to Glencore CEO Gary Nagle and chairman Kalidas Madhavpeddi, Bluebell Capital accused the London-listed mining giant of making an “alarmingly illogical” bid for Teck Resources.
The broad side came as Glencore ramped up its efforts to merge with Vancouver-based Teck and spin off their combined coal business into a new venture.
‘Complacent’: Bluebell Capital has accused the London-listed mining giant of making an ‘alarmingly illogical’ bid for Teck Resources
Bluebell, an investor in both Glencore and Teck, claims the deal would be “value-destroying.”
Teck has already rejected an offer of £18bn from Glencore and a second offer with a sweetener worth £6.6bn.
Canadian mining magnate Norman Keevil, the controlling investor in Teck, has said he will not sell to Glencore at any price.
Several other Teck shareholders yesterday urged Glencore to raise its offer. Nagle begins a charm offensive in Toronto to convince Teck’s investors to support the deal.
However, this is done against a background of increasing criticism from Bluebell.
Bluebell’s letter to Glencore, seen by the Mail, criticizes Glencore for delaying the coal spin-off.
“It’s unfortunate that you wasted a year and a half by not repositioning the company to take advantage of long-term growth opportunities in transition metals,” it said.
“Glencore shareholders, including us, would reasonably criticize this short-sightedness, complacency and lack of strategic thinking for failing to produce thermal coal in a timely manner.
“Not only did you fail to prepare adequately by making meritorious arguments against the thermal coal spin-off, but Glencore subsequently proposed an unsolicited business combination that is not optimal for both Glencore shareholders and Teck.”
Bluebell criticized the “apparent ill health of Glencore’s board” and referred to the corruption and bribery scandal that has baffled the Footsie miner in recent years.
Last year, the Serious Fraud Office ordered Glencore to pay £280 million for ‘highly corrosive’ and ‘endemic’ corruption.
The activist investor has long advocated that the miner dump his environmentally unfriendly coal business.
But coal has been very lucrative for Glencore, which made billions of dollars last year on rising prices after the Ukraine war.
Glencore is worth around £61bn, but Bluebell partner Giuseppe Bivona claims it could get a higher valuation if it dropped coal and focused on copper.
Thermal coal, which is burned in power stations to generate electricity, is the world’s most polluting fossil fuel – and is shunned by investors who increasingly claim to embrace green views.
Glencore declined to comment.