Glencore Plc’s efforts to spark an investor rebellion at Teck Resources Ltd. have succeeded, after the Canadian miner withdrew a plan to split itself in half just hours before a high-stakes vote. Now the focus shifts to whether Glencore will press its advantage with an increased takeover offer.
Teck’s rejection of Glencore’s unsolicited bid, followed by three weeks of intensive lobbying, has dramatically upset what was supposed to be a simple vote on Teck’s plan to divide its business between metals and coal. Teck Chief Executive Officer Jonathan Price admitted the company likely didn’t have the votes it needed, sending it back to the drawing board. He’s still determined to pursue a split though, and insists the Glencore offer remains a “non starter.”
That puts the ball back in Glencore’s court. The Swiss company, which declined to comment on Wednesday, said last week it was willing to raise its bid if shareholders rejected Teck’s plan. Glencore would prefer to engage with the board first, but it also threatened to go directly to shareholders with an improved offer.
Teck and controlling shareholder Norman Keevil have repeatedly rejected Glencore’s US$23 billion proposal to buy the company and then spin off the combined coal businesses, creating one of the world’s biggest metals miners in the process.
Any attempt by Glencore to circumvent Teck’s board would face significant hurdles without support from the Keevils, who have a blocking vote because they dominate the company’s “supervoting” Class A shares.
Teck investors will have an opportunity to hear from the company again today, as its shareholder meeting is still scheduled for noon Vancouver time — just without the vote on splitting the business.
The failure, for now, of that plan is a setback after the Canadian company spent four years mulling options for its steelmaking coal business before announcing a spinoff proposal in February. Teck had also raised the prospect of a sale or bidding war for its metals business after the split.
Glencore CEO Gary Nagle said previously that the company would keep pushing for a deal if the Teck spinoff plan failed. However, there was little sign on Wednesday that the Canadian miner is open to discussion. Speaking with analysts and investors after its announcement, Price said that the company is focused on working on a new plan to separate its coal business in simpler way and that it is still not interested in Glencore’s “flawed” offer.
“We will not engage on something that is a distraction from our mandate to create the greatest value with the greatest certainty for our shareholders,” he said.
Glencore had framed the vote as a referendum on its proposal, and suggested that any rejection of the Teck spinoff would demonstrate that shareholders support its approach. That was rejected by Price who said a “significant majority” supported the split between coal and metals, but just not in its current form.
The company will consider a range of alternatives to accomplish the split, the CEO said, but did not provide a time frame or further details about its options.
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