Teck approached by Vale, Anglo American, Freeport McMoRan to explore deals - report

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Teck Resources (NYSE:TECK) has been approached by Vale (VALE), Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY) and Freeport McMoRan (FCX) on potential deals for its base metals business, if the company splits in two as planned, The Globe and Mail reported Sunday.

The approaches from the three mining giants are among expressions of interest from at least a half dozen major miners inquiring about deals with Teck (TECK) following the split, according to the report.

The inquiries come as Teck (TECK) tries to fend off unsolicited takeover bids from Glencore (OTCPK:GLCNF) (OTCPK:GLNCY), which modified its $22.5B all-stock offer to include up to $8.2B in cash.

Teck (TECK) has repeatedly rejected Glencore's (OTCPK:GLCNF) (OTCPK:GLNCY) offer of merging the companies and then spinning off the combined thermal and steelmaking coal businesses, instead asking shareholders to vote for a restructuring proposal that would include spinning off the coal business and focus on copper production.

Teck (TECK) Chairman Emeritus Norman Keevil said Sunday he would support any kind of transaction for Teck Metals after a separation but only on the right terms.

"Pursuing a sale or merger transaction now would rob our shareholders of significant post-separation value," Keevil said, adding that "Glencore's proposal is the wrong one, as well as at the wrong time."

Proxy advisors ISS and Glass Lewis have urged shareholders to reject Teck's restructuring plan.

Comments

[Pmalayter]

I hope FCX stays on the sidelines. They have this habit of screwing up acquisitions.

[qwerty11]

@Pmalayter Pasqua Lama was not an acquisition...

[Eadwig]

@Pmalayter All the majors do too. Just look at the M&A disasters toward the end of the 'super-cycle' - despite China warning again and again that their growth would be slowing, especially where natural resources demand was concerned.

Glencore very nearly went out of business in 2015 after their 'merger' with Xstrata and only a 10% share placement and taking on masses of debt saved them while the share price dropped to around 15% of what it is today.

Only sky high coal prices in the last 18 months have allowed Glencore to finally clear that debt ... and some might say they now look ready to leap straight back into the fire.

Most, if not all, of the other majors also had nightmare M&A deals in the same period that did their shareholders no favours at all.

This M&A approach was described by Black Rock World Mining fund as "poor capital discipline" and said in a sector outlook statement in Aug 21 "although we are encouraged by management statements and current lower levels of debt." I.e.voards were saying they had no plans for any M&A activity and the major investors were happy with that and forecasting higher dividends.

This whole thing could be a return to the bad old days if copper, already at very high prices, doesn't increase even more in price as some are forecasting.

[alainusa]

Bidding war will start, let's go to 100$

[Geosands]

have 700, thinking of moving it up to 1000 shares. with so many potential suitors along with the future demand for copper, what could go wrong? (famous last words)

[nckadams]

A wild card in this situation is Canadian regulators, who are generally quite protectionist. I can't imagine they'd let a U.S. company acquire TECK. Supporting this notion is that only one of the company's mentioned in the article (FCX) is U.S. based.

The other complicating factor is that both ISS and Glass-Lewis advised shareholders to reject TECK's restructuring plan.

I have no position in TECK or any of the named potential buyers. I might consider opening a small position in TECK based on the level of reported acquisition interest, but think it's either too late or too early to play that game.

[Seeburto]

I want to chase it but have learned my instincts in these situations lead me astray. Good luck to any who jump in!

[gocy]

Had a feeling that the other big boys would enter the fray!
Teck price should go to the moon this Monday!!

[kruncher]

@gocy To the moon? I don't think so at this point. A lot of folks would buy now and then get disappointed and bail. However, I would like to get $60+ US currency eventually!

[greedyfellow]

Teck is looking better, I might buy tomorrow.

[brianm059]

Well that’s unfortunate timing. Been reading up on TECK this weekend. Planned on buying before the bell tomorrow. Hopefully market misses this news premarket tomorrow

[Skagit]

@brianm059

Your optimism is refreshing, sir!

As a sidenote... if there is this much interest in the copper business from others already involved in the field, it speaks a fairly loud shout out regarding their expectations. VALE is best known for iron often sold to China but also has copper and nickel assets. Anglo, like Glencore, is a diversified metals miner.

[Eadwig]

@Skagit 85%+ of Glencore's business is Coal, Copper and Trading. Zinc and Nickel are poor relations.

Not really what you'd call 'a diversfied metals miner', although many do put them in that category.

When you look into such 'diversified metals miners' you find that, in fact, the majors are mostly specilised in two or three areas, which isn't really diversified to my mind. Based on FY 22 revenues, biggest segement on the left

VALE = Iron Ore 80%, Nickel 14%
RIO = Iron Ore, Aluminium, Copper, 'Minerals'
GLEN = Coal, Copper, Trading
BHP = Iron, Copper, Coal
AAL = Copper, PGMs, Iron, Coal,
FCX = Copper

[ACP Investor]

bids will only go higher

[jrj90620]

Teck is turning out to be a great investment.

[CK Asia]

Buckle up…

[salazie]

@CK Asia do you think it will drive the price up even further ?

[Eadwig]

@salazie yes. If it goes anything like it did in the past, soneone is going to end up over-paying very badly.

[CK Asia]

@salazie I think there is every chance of a bidding war… There are very few large, new, low cost copper mines like Quebrada Blanca out there, and they have a 15 year tax stability agreement in place to protect against the government of Chile trying to rip them off. Teck’s zinc business is also quite unique. The met coal business is the only thing that has kept potential buyers away, as a large group of investors want nothing to do with coal. Met coal is certainly better than thermal, but at the end of the day, the valuations on coal assets are all in the toilet and for good reason.

Vale’s copper and nickel business, which is being spun off from iron ore, is a perfect partner for Teck’s copper and zinc business. I would be very surprised if BHP and Rio don’t have a look. I am sure Anglo American will have a crack. I am really hoping that Freeport doesn’t go after it, as whoever ends up buying it is probably going to have to significantly over pay and FCX is my largest holding.

Having said all of the, I think there is a real risk that Teck fails to get shareholder approval, in which case the whole thing is sort of in limbo and the share price could fall back a bit until there is some clarity about how this situation is going to unfold. I am not adding any more at these levels… I already have a pretty large position (for me anyway).