Glencore has received a swift rebuttal of its offer to merge with Teck Resources in an all-share deal that valued the Canadian mining giant at around US$22.5bn.
Switzerland-based Glencore made its approach on 26 March, Teck said, but it had been rejected unanimously by the board because of the UK-listed company’s exposure to coal.
Glencore had proposed spinning off its coal businesses as part of the deal, but this would still have left Teck exposed to “a large thermal coal business, an oil trading business and significant jurisdictional risk, all of which would negatively impact its value,” it said.
Earlier this year Keevil -family-controlled Teck announced its own coal business would be spun out into a new company Elk Valley Resources as part of a pivot to focus on copper.
Glencore’s move is the latest in a series of mega-deals proposed across the industry recently.
In gold, Newmont has made a US$17bn bid for Aussie rival Newcrest, Agnico Eagle and Pan American Silver are buying Yamana for US$4.8bn while Agnico is also buying Kirkland Lake for US$10.4bn.
In copper, BHP has bid for Oz Minerals in a deal worth US$6.4bn while Rio Tinto tidied up the ownership of the huge Oyu Tolgai mine in Mongolia through the buy-out of Turquoise Hill.
Glencore's move meanwhile is its biggest potential acquisition since buying Xstrata in 2013 and would help it solve the problem of what to do with its thermal coal business, said analysts.
According to Teck, discussions were held in 2020 about a similarly structured deal, though ironically it has been the strength of both companies' coal operations during the recent energy crisis that have made them among the best-performing mining shares of the past two years.
Today the Keevil family said it supported the decision of the Teck board to reject Glencore’s approach.
Norman Keevil, chairman emeritus, said in a statement: “Now is not the time to explore a transaction of this nature.”
Glencore is expected to explain its reasons for making the approach later today.
Shares in Glencore fell 1.8% to 456p. while in Canada Teck B shares were up 14% at C$56.50.