Teck Resources Ltd.’s board of directors has rejected the latest takeover offer from Swiss company Glencore.
The Canadian mining company said Thursday the revised offer is not in the best interest of shareholders.
Teck said its board and management team remain committed to its plan announced in February to split up its metal and steelmaking coal businesses into two companies, Teck Metals and Elk Valley Resources.
Glencore revised its unsolicited offer for Teck earlier this week to include an US$8.2-billion cash component. The proposal would see Teck shareholders receive 24 per cent of the combined metals company and cash.
Teck called the Glencore offer “opportunistic and unrealistic”
Teck board chair Sheila Murray said the company’s own plan “creates a significantly greater spectrum of opportunities to maximize value for Teck shareholders.”
“Teck has been clear in expressing that it is not in our shareholders’ interest to be acquired by Glencore and to merge with your thermal coal or oil trading businesses,” Murray wrote in a letter to the Glencore board.
“As you have now publicly stated you are prepared to spin out your thermal coal business, we suggest you proceed with that, separate your oil business, and then engage with Teck Metals after our own separation has been completed.”
Teck is controlled by the Keevil family which owns the company’s class A shares together with Japanese company Sumitomo.
“Now, pre-separation, is not the time to explore a transaction of this nature,” said Norman Keevil, Teck’s chairman emeritus.
“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.”
Glencore’s initial proposal had been an all-stock offer that would have seen it acquire Teck and then split up the metals side of both companies along with parts of Glencore’s marketing business into one company, and the combined coal and some other related assets into another company.
In revising its offer, Glencore acknowledged that certain Teck investors may prefer a full coal exit and others may not desire thermal coal exposure. The cash component was meant to effectively buy Teck shareholders out of their coal exposure.
Teck shareholders are set to vote April 26 on the company’s plan to split its operations into Teck Metals and Elk Valley Resources.