Teck Resources Ltd.’s move to delay a key shareholder vote has spurred discussions around future possibilities for the company, with analysts saying there's a chance of a more hostile posture from Glencore Plc. 

“I thought Glencore was very clear in a letter on April 19, where they essentially put out a carrot and a threat,” Lucas Pipes, a managing director at B. Riley Securities, said in an interview with BNN Bloomberg Wednesday. 

Pipes said that the threat is going directly to shareholders. 

In a statement Thursday, Glencore said that if it does not receive engagement from Teck’s board it will put its takeover offer directly to shareholders. 

“Glencore remains willing to make an offer directly to Teck shareholders if there continues to be no engagement from the Teck Board,” Glencore said in the statement. 

The Swiss mining company similarly stated on April 19 that it is willing to consider improvements to its offer, but that if it was unable to engage with Teck’s board it would bring its proposal to Teck’s shareholders. 

“The carrot was, ‘We are willing to improve to improve the offer if the board engages with us.’ And my interpretation of the events of the day is that the board is not interested in engaging with Glencore today,” Pipes said. 

Glencore reiterated in its statement Thursday that it is willing to “further improve” its proposal structure if it receives engagement from Teck’s board. 

“So if Glencore sticks to its word, which I would assume they would [then] you go to that threat and you make an offer,” Pipes said. 

On Wednesday, Teck cancelled a key shareholder vote hours before it was expected to occur. The vote would have given shareholders the opportunity to rule on a proposed split of the Vancouver-based mining company’s steelmaking coal business. 

Teck said Wednesday it still intends to split the business after incorporating shareholder feedback and crafting a simpler version of the split. The Canadian mining company also reiterated its opposition to Glencore’s proposal. 

Analysts at Jefferies highlighted in a research note Wednesday that in Glencore’s open letter last week, the company stated its offer to acquire Teck would stand if Teck delayed its shareholder meeting, or if shareholders vote down the proposed separation of its business. 

Given that Teck’s CEO reiterated opposition to the proposal Wednesday after the cancelled vote, analysts at Jefferies said “we believe it is logical to assume that Glencore goes hostile (direct to Teck's Class B shareholders) next.” 


Amid uncertainty regarding the future of the Vancouver-based mining company, Pipes said it is important to remember that Teck is an “incredibly sophisticated company.” 

“I can't imagine that they [Teck] haven't thought about these other paths and explored these other paths before, they clearly thought that the separation that they proposed was in the best interest of shareholders,” he said. 

Pipes said he sees two potential options for the Canadian company as it goes back to the drawing board. 

“I think it could mean a spin out of the coal business, without the royalty, without these cash flow sweeps,” he said. 

However, that option could come with increasingly complex tax implications, Pipes said

“Another option would be to look at, albeit at a small universe of coal companies out there for their interest,” he said. 

“I think that there's that opportunity to go back and see who else could be interested in just the coal business. Because then it would free the metals business to continue to mature and get into that competitive bidding process that management alluded to today [Wednesday] on the conference call.” 

In a note to investors on April 26, analysts at TD Securities Inc. said that an April 16 statement from Teck’s controlling shareholder, Norman Keevil, could have implications for the future of the business. 

In the statement, Keevil said that he would be open to a transaction given the right circumstances. 

The analysts at TD said this comment “potentially opens the door to bidders, other than Glencore, that could be interested in acquiring Teck Resources gaining support from Class A shareholders.”