Glencore ramps up its pursuit of Canadian miner Teck Resources

Glencore has ramped up pressure on Teck Resources as it continues a bid to take control of the Canadian miner.

In a letter to Teck shareholders, the FTSE 100 firm said it was ‘willing to consider’ upping a £18.5billion bid after it was rejected by management.

‘We have sought to engage with your board regarding our proposal, but your board has consistently refused any engagement,’ Glencore wrote, adding it was willing to talk to shareholders directly if its advances were continually rebuffed, effectively threatening a hostile takeover.

‘We urge Teck shareholders to take action to ensure that the board engage in bona fide negotiations regarding Glencore’s proposal,’ said chief executive Gary Nagle.

Takeover bid: In a letter to Teck shareholders, Glencore said it was ‘willing to consider’ upping a £18.5bn bid for the Canadian miner after it was rejected by management

Teck has repeatedly snubbed Glencore, having branded its merger offer a ‘non-starter’.

Canadian magnate Norman Keevil, the controlling investor in Teck, has also said he will not sell to Glencore at any price. But other shareholders have urged the company to increase its bid.

Teck wants to proceed with a plan to split its business into two entities focusing on coal and metals respectively.

Investors are due to vote on the proposal next Wednesday – a poll increasingly being seen as an informal referendum on Glencore’s offer.

If it does succeed in taking over Teck, the Swiss firm also plans to separate the combined business into a coal-focused entity, listed in New York, and a metals group based in Canada. 

Glencore’s pursuit, launched this month, comes as the industry’s big players try to restructure businesses around metals such as copper and nickel, which are the key to the world’s transition to green energy.

‘Glencore indicated it would be happy to dig a bit deeper if the target’s board were willing to engage in conversation. 

‘That is not a surprise as miners rarely back down once they have fixed their eye on a new target,’ said AJ Bell investment director Russ Mould.

‘Ultimately, it is all down to price and even the most stubborn will eventually cave in if enough carrots are dangled in front of their face.’

But Glencore also is facing opposition to its plans from its own investor base.

In a letter sent last week to Nagle and Glencore chairman Kalidas Madhavpeddi, activist shareholder Bluebell Capital blasted the takeover attempt as ‘alarmingly illogical’.

Bluebell, an investor in both companies, said the merger would be ‘value destructive’ and criticised Glencore for not separating out its own coal business sooner.

Teck said ‘now is not the right time’ to merge with Glencore and accused its rival of trying to ‘frustrate value creation’ for investors.

This post first appeared on Dailymail.co.uk