Here’s Why Teck Resources Rejected Glencore’s Revised Offer

In early April, commodity giant Glencore (LON: GLEN) made an unsolicited offer for Canadian miner Teck Resources (NYSE: TECK).

The proposed deal was an all-share offer and valued Teck at approximately $23 billion, potentially creating a mining giant. However, that was swiftly rejected, with the company stating it is “not contemplating a sale of the company at this time.”

Nevertheless, Glencore then made a revised offer that included $8.2 billion in cash, but that too was rejected, with Teck stating that the proposal was “materially unchanged” and was still not in the company's best interests.

“Glencore has made two opportunistic and unrealistic proposals that would transfer significant value to Glencore at the expense of Teck shareholders,” commented 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.”

The company added that Glencore's bid doesn't address significant inherent risks, such as jurisdictional and ESG concerns, substantial regulatory hurdles, and diluting the base metals business. In addition, they pointed to a destruction of value, significant execution risks, and no increase in value in the revised proposal. 

Teck is set on its pending separation, which it believes will provide shareholders with a more significant set of options to maximize value.   

The company added that the separation “minimizes execution risk, provides a path to fulfill the full potential of Teck Metals, realizes significant value for the high-quality steelmaking coal assets of EVR, and does not foreclose future opportunities for other value-enhancing transactions.”

Meanwhile, Glencore has yet to respond.