Glencore ramps up its pursuit of Canadian miner Teck Resources

Glencore threatens to go straight to shareholders as it ramps up its hunt for Canadian miner Teck Resources

Glencore has stepped up the pressure on Teck Resources as it continues its bid to take control of the Canadian miner.

In a letter to Teck shareholders, the FTSE 100 company said it was ‘willing to consider’ raising an offer of £18.5bn after being rejected by management.

“We have attempted to engage with your board of directors regarding our proposal, but your board of directors has consistently declined any involvement,” Glencore wrote, adding that he was willing to speak directly to shareholders if his advances were continually rejected. effectively threatening a hostile takeover.

“We are urging Teck shareholders to take action to ensure that the board conducts bona fide negotiations on Glencore’s proposal,” said CEO Gary Nagle.

Takeover bid: In a letter to Teck shareholders, Glencore said it was ‘willing to consider’ raising an £18.5bn bid for the Canadian miner after it was rejected by management

Teck has repeatedly rejected Glencore, declaring its merger offer a ‘non-starter’.

Canadian magnate Norman Keevil, the controlling investor in Teck, has also said he will not sell to Glencore at any price. But other shareholders have urged the company to raise its offer.

Teck wants to move forward with a plan to split its business into two entities focused on coal and metals respectively.

Investors will vote on the proposal next Wednesday – a poll increasingly seen as an informal referendum on Glencore’s bid.

If it succeeds in acquiring Teck, the Swiss company also plans to split the combined company into a coal-focused entity, listed in New York, and a metals group based in Canada.

The Glencore pursuit, which launched this month, comes as the industry’s big players are looking to restructure companies around metals like copper and nickel, which are key to the world’s transition to green energy.

Glencore indicated that it would be happy to dig a little deeper if the target board was willing to engage in a conversation.

“That’s no surprise, as miners rarely back down once they’ve set their sights on a new target,” says AJ Bell investment director Russ Mold.

“Ultimately it’s all about the price and even the most stubborn will eventually succumb if enough carrots dangle in front of their face.”

But Glencore is also facing opposition to its plans from its own investor base.

In a letter sent to Nagle and Glencore chairman Kalidas Madhavpeddi last week, activist shareholder Bluebell Capital called the takeover attempt “alarmingly illogical.”

Bluebell, an investor in both companies, said the merger would be “value-destroying” and criticized Glencore for not spun off its own coal company sooner.

Teck said “now is not the right time” to merge with Glencore, accusing its rival of “frustrating value creation for investors.”