VANCOUVER — Glencore says it is willing to consider improving its offer to acquire Teck Resources Ltd., but the Swiss company says shareholders of the Canadian miner must first reject a plan to separate its base metals and steelmaking coal businesses.
In an open letter to Teck shareholders on Wednesday, Glencore CEO Gary Nagle said he believes that any such improvements are best considered following engagement by the Teck board of directors.
Glencore has never stated that its proposal is "best and final" and that it is not willing to make changes and improvements to its proposal, Nagle said in the letter.
"In fact, we believe that with engagement, we could improve our proposal’s terms and value, which would be in the best interests of all Teck shareholders," he said.
Teck's board has rejected Glencore's unsolicited takeover offer that would see shareholders receive a stake in a combined metals company as well as a choice of cash or shares in a company that would hold their merged coal assets.
The proposal represented a 20 per cent premium when it was first made.
Instead, Teck is pursuing a plan it announced in February to split up its metal and steelmaking coal businesses into two companies, Teck Metals and Elk Valley Resources.
The proposal will be voted on by shareholders on April 26.
However, Glencore says it cannot pursue its proposal if Teck's plan to separate its businesses goes ahead because it would add significant complexity to the deal.
"A two-step transaction would require the involvement of two sets of boards and shareholders, and introduce significant potential delay following completion of the proposed Teck separation," Nagle wrote.
Teck chief executive Jonathan Price said the Glencore proposal is not a realistic or viable option and urged shareholders to support the company's plan.
"This is a distraction – a transparent and opportunistic attempt to disrupt our separation plan with an ill-defined and highly uncertain proposal," Price said in his own letter to shareholders Wednesday.
"Importantly, Glencore admits that they are uniquely positioned to make an offer for Teck in its current form; the pending separation will correct that by opening up a wider range of opportunities for value enhancement."
Price said the Glencore offer is a slightly modified version of a proposal the company made for Teck in 2020 that was rejected because it was not in the best interest of shareholders.
Teck is controlled by the Keevil family, which owns the company's class A shares together with Japanese company Sumitomo.
Teck chairman emeritus Norman Keevil has said Glencore's proposal is the wrong one, at the wrong time, but that he is open to talking about other possible deals once the company completes its own plan to split its business.
Keevil has said he would support a transaction — whether it be an operating partnership, merger, acquisition or sale — with the right partner, on the right terms for Teck Metals after the separation takes place.
This report by The Canadian Press was first published April 19, 2023.
Companies in this story: (TSX:TECK.B)
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