Glencore has sweetened its offer to Teck Resource to make the Canadian group more amenable to its merger proposal.
Originally an all-share proposal, Glencore has now proposed an US$8.2bn cash element that it says effectively buys out Teck shareholders from the combination of the two companies’ coal interests.
Under the revised plan, Teck shareholders will hold 24% of the two companies’ metals businesses plus a stake either in their merged coal interests (CoalCo) or the cash alternative.
Glencore added that it believes CoalCo would be a leading highly cash-generative bulk commodity company, but appreciates some Teck investors either want a full coal exit or to move away from thermal coal.
Teck so far has been vehement in its rejection of Glencore’s approach.
“Glencore hasn’t presented a coherent plan for its proposed coal company,” chief executive Jonathan Price told The Globe and Mail last week.
“There’s no market for shares for a massive new thermal coal-focused company, and it would expose our shareholders to significant jurisdictional, ESG and execution risk.”
Glencore has seemingly addressed those concerns with the new plan but faces a battle to convince the firm’s controlling shareholders the Keevil family.
Norman Keevil has stated already he would not sell to Glencore “regardless of price”.
Prior to Glencore’s approach. Teck had announced its own plans to split into two companies: Elk Valley Resources, which would hold its metallurgical coal assets and Teck Metals, which would hold its copper and zinc assets.
Glencore shares rose 2.7% to 469.6p on news of the revised terms, while Teck B shares added 1.3% to US$43.30.