Teck Resources Ltd. canceled a vote to spin off its coal assets hours ahead of its shareholder meeting, handing the initiative to Glencore Plc in its attempt to buy the company.

The move caps a tense three weeks of lobbying investors by both Teck and Glencore, and suggests Teck may not have mustered the support it needed. The Canadian miner rejected a US$23 billion takeover proposal from Glencore earlier this month, and said it would instead press on with the plan to spin off its coal mines, to focus on mining copper and zinc.

The focus will now turn to Glencore — which has dangled the prospect of a higher offer — and whether Teck’s own investors will pressure the company to enter discussions. While the canceled vote is an embarrassing reversal, any takeover would still require the support of controlling shareholder Norman Keevil, who holds an effective veto through Teck’s “supervoting” A Class shares.

Teck said in a statement it still intends to pursue the company split, and hasn’t changed its view on Glencore’s offer. It will consider shareholder feedback and present a new proposal. Teck shares jumped as much as 11 per cent in Toronto and traded 4 per cent higher at 12:54 p.m.

The vote on Wednesday had turned into a showdown over the future of Teck — Glencore said its proposal would be dead if the spinoff were approved, as it tried to persuade shareholders to vote “no” and pressure the company to engage. A Glencore spokesman declined to comment on Teck’s announcement.

The Swiss commodities giant wants to buy Teck and then create two new companies from their combined metals and coal businesses. The deal would offer control of Teck’s lucrative copper mines at a time when the world is worrying about a shortage, and also allow Glencore to get out of the profitable yet polluting thermal coal business. But the takeover fight also has wider significance in the global mining industry, marking a public return to large-scale mergers and acquisitions by the world’s biggest producers after years on the sidelines.

“Glencore’s rejected proposals remain a non-starter, with the same flawed structure and material execution risks identified by our board,” said Teck Chief Executive Officer Jonathan Price. “Our plan going forward is to pursue a simpler and more direct separation, which is the best path to unlock the full value of Teck for our shareholders.”

Teck had proposed creating a new steelmaking coal company, called Elk Valley Resources, that would continue to pay a royalty to its remaining metals business for several years. The ongoing link between the two companies would have muddied its appeal for investors who no longer wanted exposure to coal.

Glencore, by contrast, had offered to pay cash to buy Teck investors out of their exposure to the companies’ combined coal businesses.

OPENS POSSIBILITIES

The canceled vote “opens up several new possibilities, such as an improved proposal from Glencore, a separate sales process for the coal assets, or an immediate spin of the coal business,” B. Riley Securities analysts Lucas Pipes and Nick Giles wrote in a note.

Teck, which has repeatedly rejected Glencore, had said it would be prepared to discuss takeover offers for its metals business after the spinoff, and even raised the prospect of a bidding war. However, the board’s position suffered a blow when two influential shareholder advisory firms, Glass Lewis and Institutional Shareholder Services, both recommended votes against the Teck plan.

Teck will consider a range of alternatives for how best to split off its coal assets, Price said on a call with analysts, but declined to provide a timeframe.

“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,” Price said.

The shareholder meeting is still scheduled for noon in Vancouver today. The resolution on the split required two-thirds approval from both classes of shareholders separately — the A Class “supervoting” stock dominated by Teck’s founding Keevil family, as well as regular B class shares. While several smaller investors had come out for or against Teck’s plan, the company’s largest shareholders have not made their position public.

China’s sovereign wealth fund, China Investment Corp., is the biggest holder, with about 10 per cent, followed by BlackRock Inc. and Dodge & Cox.

“The late withdrawal by Teck of its separation plan from today’s AGM appears to reflect significant shareholder concerns that the plan is too complicated,” said Bloomberg Intelligence analysts.  “Glencore will view this climbdown as an opportunity to reassert its merger proposal, which will need to be improved to win over broad shareholder support.”