Teck Resources chief declares Glencore bid a ‘non-starter’

The chief executive of Teck Resources has called Glencore’s unsolicited bid for the Canadian mining group a “non-starter” and is urging shareholders to vote for a separation of the business instead.

Jonathan Price, who has led Teck since September, said in an interview with the Financial Times that the proposal from the Swiss-based commodity trading and mining group would destroy shareholder value, adding that there were “fundamental flaws” in the deal’s structure.

It is the first time Price has spoken publicly since Teck’s board rejected the hostile approach from Glencore earlier this month. A tie-up between the two companies would create a natural resources giant valued at more than $90bn.

In a presentation released by Teck on Monday ahead of a call with investors, the company said its separation into a steelmaking coal business and metals miner remained the best option for shareholders voting at its annual meeting later this month.

“The choice for our shareholders is to separate Teck Resources or maintain the status quo,” said Price. “There is no other transaction on the table at that meeting.”

Glencore offered to buy Teck for a 20 per cent premium to its share price on March 26 in an all-share transaction that would value the company at almost $23bn.

Under the proposal, the Swiss group said it would spin out its own highly profitable coal business into a New York-listed company called “CoalCo” that would also house Teck’s metallurgical coal assets. A separate “MetalsCo” entity would include the industrial metals businesses of Glencore and Teck, as well as Glencore’s oil trading business.

Teck has shot down the plan on the grounds that it would reduce exposure to copper for its shareholders and introduce oil trading and thermal coal that would dilute the value of its metals and steelmaking coal businesses respectively.

The company also said investors would be introduced to “significant jurisdictional, [environmental, social and corporate governance] and execution risk”, referring to Glencore’s operations in the Democratic Republic of Congo and potential challenges with regulatory authorities.

Price said it had not received bids from other suitors that required the board’s review but it would be open to proposals if and when it had divided up its own businesses.

“Post-separation there will be a spectrum of value creation opportunities that can exist for both companies,” he said.

Shareholders will decide on Teck’s own spinout plans on April 26, with approval requiring a two-thirds majority from both class A and class B shares.

The company operates a dual-class structure in which the family of 85-year-old mining magnate Norman Keevil owns the majority of class A supervoting shares, each worth 100 votes. The class B shares are worth one vote each.

Keevil, who joined Teck in the 1960s and is now chair emeritus of the company, told Canadian media that he would not sell to Glencore regardless of the price, saying “Canada is not for sale”.