The future of Glencore PLC (LSE:GLEN) $23 billion bid for Canada’s Teck Resources Ltd (TSX:TECK.B) hangs in the balance of its shareholders and the mining company’s largest stakeholder.
After Teck publicly rejected Glencore’s proposal earlier this week, it is up to the commodities trader to convince shareholders to reject the company’s current strategy to split into two at an upcoming shareholder meeting.
But one major shareholder has made it clear that he’s not interested in selling.
Norman Keevil is a Canadian mining executive and patriarch of the Keevil family, which is known for its involvement in the mining industry. Born in Vancouver in 1936, Keevil began his career in mining in the 1950s and went on to become a prominent figure in the Canadian mining industry.
Keevil is best known for his role in building Teck into the mining giant that it is today. He served as CEO from 1985 to 2001.
During his tenure, he oversaw the growth of Teck into one of the largest mining companies in the world, with operations in several commodities including copper, zinc, coal, and oil sands.
Earlier this week, Keevil issued a statement to say that he remains “fully committed to Teck's proposed transaction to create two world-class, well-focused, independent companies” and expressed “unequivocal” support for the Board's decision to reject Glencore's unsolicited offer.
“Now is not the time to explore a transaction of this nature, and I have the utmost confidence in the Board's and our management teams' strategy to maximize value for each of Teck Metals' and EVR's shareholders after the separation,” Keevil told investors.
Dual-class share structure may provide opportunity for Glencore
Keevil, as a controlling investor, holds a great deal of sway. But the company’s dual-class structure may also provide an opportunity for Glencore.
The powerful Class A shares are held primarily by the Keevil family, giving them more voting power than the other class, which is usually referred to as Class B shares.
Teck’s plan to separate its base metals and coal businesses will require two-thirds approval from both sets of investors separately, so shareholders with just a small percentage of the total voting rights could have the power to spoil Teck’s plan and pave the way for Glencore to move ahead with its bid.
The dual class shareholder structure is set to have a six-year sunset, which would see all A shares convert to B shares in 2029, subject to final approvals in 2Q, 2023.
"Until then, the dual shareholder structure we expect will continue to provide a significant hurdle to getting an unsolicited offer accepted by a sufficient number of shareholder votes," Stifel analysts wrote.
The vote scheduled for April 26.
Contact Angela at angela@proactiveinvestors.com
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