Glencore says takeover bid for Teck stands after spinoff fails

Teck has four steelmaking coal operations in the Elk Valley of British Columbia, Canada. (Image courtesy of Teck.)

Glencore (LON: GLEN) is far from giving up on its plan to take over Teck Resources (TSX: TECK.A, TECK.B) (NYSE: TECK) as it confirmed on Thursday its bid for Canada’s largest diversified miner still stands.

The Swiss mining giant and commodities trader, which does not typically takes “no” for an answer, implied that Teck’s decision to withdraw its proposal to split up into two companies backed its own plans.

The Vancouver-based miner scrapped on Wednesday its plan to split into two just ahead of a key shareholder vote, as Glencore circled with a $23 billion offer made in March and the promise of a sweeter one.

Teck, which could not convince the majority of its investors to back the plan to separate its copper and coal businesses, said its board will work on providing a “simpler and more direct separation plan”.

The move is considered as a key win for Glencore, which had been campaigning to persuade Teck’s shareholders to vote against the split, and instead accept its unsolicited bid.

Glencore has framed the failed vote as a mandate to begin talks on its offer, noting on Thursday that its owns proposal provided Teck shareholders with a “clean separation” for its coal business, while also creating significant additional value for its shareholders.

The firm added that it was willing to engage with Teck’s board to improve its proposal structure, but would still make an offer directly to shareholders if there was no response.

“Now that Teck’s grand plan to reinvent itself has crashed and burned, Glencore will certainly make a third attempt, this time at a higher price that Teck’s Class B shareholders, who control most of the equity but few of the votes, may find irresistible,” The Globe and Mail European Bureau chief, Eric Reguly, wrote in an opinion piece on Wednesday.

Glencore, which plans to acquire Teck and then split itself into two companies —  metals and coal — appealed to the Canadian public by saying that its own metals unit would have “significant critical minerals and recycling operations in Canada, managed from Canada.”

The country’s deputy prime minister, Chrystia Freeland, said on Monday that Teck should remain headquartered in Canada, providing the clearest indication to date that the government was closely watching the takeover battle.