Canadian miner Teck Resources on Wednesday abandoned a shareholder resolution to split the company just hours before the vote, as it comes under pressure from a multibillion dollar hostile bid from Glencore.
Teck said it was not confident it could secure the two-thirds support from shareholders necessary to approve the restructuring in its current form, but that it planned to revise its approach.
Swiss miner Glencore launched an unsolicited $23bn bid to merge with Teck that was revealed earlier this month, and encouraged shareholders who supported the bid to vote against Teck’s planned split. Teck’s board repeatedly rejected Glencore’s advances.
Teck held its shareholder vote on other resolutions on Wednesday, all of which passed with near-unanimous support, including one that would phase out the company’s supervoting shares over the next six years.
Teck’s chief executive, Jonathan Price, said on Wednesday the company would revise its separation proposal, taking some shareholder concerns into account. “Our plan going forward is to pursue a simpler and more direct separation,” he said.
The original proposal was to divide the company into separately listed businesses — one for metals and one for steelmaking coal — with the coal business continuing to pay royalties to the metals business for three and a half years.
Some shareholders had criticised that structure as being convoluted because of the royalty links.
“[Mergers and acquisitions] can also play a role in creating value when done at the right price, with the right partner, and at the right time,” Price said later at Teck’s shareholder meeting, without mentioning Glencore.
“We have premium businesses, and when it comes to M&A, we firmly believe competition for great assets drives value . . . we’ll not engage on something that is a distraction from our mandate to create the greatest value with the greatest certainty.”
Glencore’s shares closed 2.6 per cent higher at 481.40p in London; Teck’s shares rose 4 per cent to $44.95 in Toronto.
Glencore has spent recent weeks lobbying Teck’s shareholders to support its unsolicited bid, with the chief executive of the Swiss mining and trading house even flying to Toronto to meet shareholders.
Glencore had proposed to merge with Teck, then demerge into two companies — a metals and trading business based in Canada, and a giant coal miner that would be listed in New York.
The Swiss miner said it would not be interested in a deal if Teck proceeded with its own split.
Price said earlier on Wednesday that Glencore’s rejected proposals “remain a non-starter, with the same flawed structure and material execution risks identified by our board.”
Teck’s restructuring proposal would have required two-thirds approval from both the common class B shareholders and the class A supervoting shareholders.
The class A shares are controlled by chair emeritus Norman Keevil alongside Sumitomo Metal Mining, both supporting the restructuring.
However, influential proxy advisers Glass Lewis and Institutional Shareholder Services had both recommended against the restructuring proposal.
