Nicholas L. M. Allen
Apr 19, 2023
Board of Directors unanimously reject Glencore's proposal after revisions.
Teck Board of Directors unanimously rejects revised, unsolicited proposal from Glencore, claiming Glencore’s revised proposal is materially unchanged and still not in the best interest of Teck on April 13.
The board recommended shareholders vote for separation and dual class amendment. They announced that its Board of Directors has reviewed and unanimously rejected an acquisition proposal from Glencore which was received on April 11, which would see that company acquire Teck.
Consistent with its duties and in consultation with its financial and legal advisors, Teck’s Board of Directors conducted a detailed review and assessment of the proposal and determined that the revised proposal is not in the best interest of Teck or its shareholders. The Teck Board and management team remain fully confident that Teck’s planned separation creates a greater spectrum of value enhancing opportunities for both Teck Metals and Elk Valley Resources (EVR).
“Glencore has made two opportunistic and unrealistic proposals that would transfer significant value to Glencore at the expense of Teck shareholders,” said Sheila Murray, Chair of the board at Teck, “Teck’s proposed separation creates a significantly greater spectrum of opportunities to maximize value for Teck shareholders. The special committee and board continue to recommend that shareholders vote for the proposed separation into Teck Metals and EVR as the best pathway to fully realize the greatest value.”
According to Teck CEO Jonathan Price, Glencore recognizes that after Teck splits, they would be exposed to significantly greater competition. This is why they are trying to frustrate Teck’s separation process, he explained.
“The fundamental flaws of Glencore’s revised proposal continue to make it a non-starter. It does not address major inherent risks including substantial regulatory hurdles, jurisdictional and ESG concerns, and diluting the base metals business with significant oil trading,” said Price.
It is currently “not the time” to explore a transaction of this nature claims Dr. Norman Keevil, Chairman Emeritus at Teck.
“I have the utmost confidence in the board’s and our management teams’ strategy to maximize value for each of Teck Metals’ and EVR’s shareholders after the separation,” added Keevil.
The proposal would eliminate the ability of Teck to explore opportunities to maximize value post-separation and would remove Teck shareholders’ choice to remain invested in the steelmaking coal business.
Teck also claims it would expose shareholders to significant jurisdictional risk, contaminate metals with one of the world’s largest oil trading businesses and lead to regulatory uncertainty that could take up to two years to resolve.
Another issue they found is that there is no clear plan by Glencore to exit coal, leading Teck shareholders to remain exposed to thermal coal for an uncertain period of time.
In contrast, Teck claims their pending separation provides shareholders with a greater set of options to maximize value. According to Teck, the separation minimizes execution risk, provides a path to fulfill the full potential of Teck Metals, realizes significant value for the steelmaking coal assets of EVR and does not foreclose future opportunities for other value enhancing transactions.
Teck’s Board of Directors unanimously recommends that shareholders approve the previously announced reorganization of Teck’s business and the proposal to introduce a six-year sunset for the multiple voting rights attached to the Class A common shares of Teck at the annual and special meeting of shareholders on April 26.