Teck Resources believes it is close to winning the backing of its largest shareholder for its plan to separate its metals and coal businesses, as the Canadian miner battles a $23bn hostile takeover bid from Glencore.
Jonathan Price, chief executive, told the Financial Times he had spoken to China Investment Corporation, which holds about 10 per cent of the company’s common shares, and was confident of their support.
Swiss commodities group Glencore’s approach early this month, which would have created a natural resources giant valued at more than $90bn, was rejected by Teck’s board as a “non-starter”.
However, Teck shareholders are divided on how to view Glencore’s proposal, as well as Teck’s pre-existing plan to split the company in two — which goes to a shareholder vote on April 26.
The vote is not only being seen as a referendum on the split but also as an informal poll on whether shareholders might prefer Glencore’s offer, and reports over the weekend suggested CIC might back Glencore’s proposal.
But Price said he had spoken to CIC as recently as Sunday night “and they confirmed to me that they have not met with Glencore, and that the media reports are false. We have a very good, ongoing open and constructive dialogue with CIC and look forward to having them as partners in the future.”
However, he added that CIC had not yet made a final decision on how it would vote on April 26.
CIC declined to comment.
Another Teck shareholder, Legal & General Investment Management, said it would vote in favour of Teck’s proposed split.
“We believe it is a balanced proposal with safeguards to reduce climate-related risks,” the asset manager said in a statement.
Price also said he had held constructive conversations with Sumitomo, the Japanese investment group that holds significant voting rights through its supervoting shares, which he said had a “very long-term view on value creation in the mining industry, which is consistent with ours”.
However, influential proxy advisers Glass Lewis and ISS both recommended voting against Teck’s proposed split, raising the possibility that the proposal by its management could fail.
The proposal needs two-thirds approval from class A shareholders and class B (common) shareholders in order to pass.
Glencore’s takeover bid aims to create two huge mining groups, one in metals and one in coal, and is contingent on the Teck spin-off not taking place. Glencore has asked Teck to delay the vote and engage in talks.
Teck’s chair emeritus, Norman Keevil, who holds a controlling voting stake through his ownership of class A shares, has vociferously opposed the Glencore bid.
However, Keevil said in a statement on Monday that he would be open to other M&A opportunities for Teck if it splits in two.
“There are numerous mining industry parties who have their eyes on Teck and would be interested in partnering or investing in Teck Metals after it separates its base metals and steelmaking coal businesses,” he said.
