Glencore’s rejected merger proposal was effectively a “simpler and larger version” of Teck Resources’ current strategy to split, according to Deutsche Bank.
Given Canadian miner Teck plans to split its base metals and coking coal assets into two separate businesses anyway, Glencore’s idea of separating the two’s newly formed business was “similar,” the bank said.
Deutsche rated Glencore a ‘buy,’ despite its US$22.5bn offer being rejected.
It asked rhetorically if a “coal separation” at the Swiss mining giant was “now in play,” after previous suggestions that it would eventually move away from the fossil fuel.
Deutsche pointed out that Glencore had admitted the acquisition process would be lengthy, in line with Teck’s concerns of complexity, but also noted it would likely not face “major” anti-trust issues.
The bank gave Glencore a share price target of 575p following the news, up nearly 30% on Monday’s opening value of 452.5p.