Glencore Plc is getting closer to increasing its offer for Teck Resources Ltd., in a move aimed at ending weeks of limbo in the battle over the Canadian miner’s future.
The Switzerland-based commodities giant is working on a potential improvement to its bid that could be announced as soon as the coming weeks, according to people familiar with the matter, who asked not to be identified discussing private information. By raising its offer and ratcheting up shareholder pressure, Glencore is seeking to force Teck to the negotiating table, the people said.
The bitter fight that transfixed the mining world moved behind the scenes since late April, when Teck’s board was forced into an embarrassing reversal after failing to win enough investor support for a plan to split the company. Teck at the time reiterated its opposition to Glencore’s $23 billion bid, and Glencore repeated that it was willing to go higher, but there has been little public movement since then.
The situation remains fluid, and Glencore’s plans could still change, the people said. Even if it can deliver a big enough increase to win over Teck’s shareholders, management and investors, there is still a potentially larger hurdle to face: Norman Keevil, the Canadian mining patriarch whose family’s “supervoting” shares give him a veto on any big decisions, has come out strongly against a Glencore takeover.
Still, an increased bid would increase the pressure on Teck’s board, which has been forced back to square one on its strategy to split out its coal business after April’s failed vote. While Glencore has been reluctant to boost its offer without some sort of engagement, some Teck shareholders have told the Swiss miner and trader they want to see a higher bid before they will be willing to exert more pressure in its favor, some of the people said.
There have been no recent discussions between the two sides, the people said, as Teck refuses to negotiate about a deal it has consistently called a “non-starter.”
Instead, the two companies have been traveling the globe to pitch investors on their competing visions for Teck’s future, the people said, with Teck Chief Executive Officer Jonathan Price meeting with top shareholder China Investment Corp., while Glencore executives jetted to Ottawa to make their case to Canadian officials.
Spokespeople for Glencore and Teck declined to comment. Calls to CIC’s office weren’t answered outside regular business hours.
The fight over Teck’s future reflects a revived appetite for dealmaking across the mining world, as well as the difficult questions facing companies with large coal operations.
Read more: Teck Pulls Vote on Coal Split, Handing Momentum to Glencore
An increased bid by Glencore would be the latest escalation in the battle that went public in early April after Teck’s board and controlling shareholder publicly rejected its earlier proposal. The Swiss commodities giant offered to buy Teck and then create two new companies combining their respective metals and coal businesses.
For Glencore, the deal would be company defining, allowing it to create one of the world’s biggest miners of metals while jettisoning its increasingly unpopular — but highly profitable — coal business in the process.
For its part, Teck has spent years considering options for its own coal operations before announcing a complicated plan to spin off a coal company that would continue funneling profits back to the metals business for several years following the split. Teck has one of the best copper growth pipelines among all the big miners, but has been depending on profits from its coal business to fund it.
The Canadian miner says it still sees a split as the best option, but now faces a race against time to come up with a new and simpler plan that won’t leave the metals business exposed. It has said it’s “working around the clock,” including engaging with counterparties interested in buying its coal assets.
Read more: Glencore and Teck Take Fight to Barcelona With Investor Pitches
One interested buyer is Canadian mining financier Pierre Lassonde, who has expressed interest in acquiring the coal assets with a consortium of investors. Teck is also engaging other coal producers, as well as considering options including a stake sale or possible listing.
Any takeover of Teck would face scrutiny from Prime Minister Justin Trudeau’s government, which has considerable latitude to block foreign acquisitions and has recently clamped down on foreign investment in Canada’s critical minerals industry. Trudeau and top government officials have been careful not to take a definitive stance on Glencore’s proposal but have indicated tacit support for the Vancouver-based company.
By Thomas Biesheuvel, Dinesh Nair and Jacob Lorinc / Bloomberg
