Glencore rejects mining company Teck’s merger proposal

Commodity giant Glencore wants to merge with Canadian mining company Teck. The transaction, which includes the spin-off of the combined coal company into a new company, is rejected by Teck.

The Zug-based raw materials group expects synergy effects of USD 4.25 to USD 5.25 billion from a possible merger, Glencore reported Monday. A similar proposal was submitted to the board of directors of Teck Resources a few days ago.

Specifically, Glencore offers an exchange ratio of 7.78 Glencore shares per Teck B share. This equates to a 22 percent premium to closing prices on March 31. In addition, shareholders will receive 12.73 shares of Glencore per A share, which also corresponds to a premium of 22 percent.

If a deal were struck at this exchange ratio, Glencore shareholders would receive 76 percent of the combined company and Teck shareholders would receive 24 percent.

proposal rejected

The board of directors of the Canadian mining company rejects the proposal in an initial response. The transaction is “not in Teck’s best interest,” according to a statement. The board of directors also emphasizes in the letter that “at this time” no sale of the company is being considered.

The reason for the rejection is that the Teck shareholders would be involved in the coal and oil business if the deal were accepted. This violates Teck’s ESG obligations and carries significant legal risks. The Canadians announced in February that they would split their own business into coal and base metals. Teck emphasized that your own plan carries fewer risks. (sda/awp)