Teck Resources Limited said that it has rejected a sweetened bid from Glencore PLC (LSE:GLEN) and made changes to a proposed restructuring plan to allow for an earlier spinout of its metals and coal divisions into separate entities.
Originally an all-share proposal, Glencore then revised its proposal and offered Teck's shareholders 24% of the combined metals group and up to $8.2 billion in cash for those who may not want exposure to thermal coal.
The copper-focused company plans to separate Teck into two separate companies — Teck Metals and Elk Valley Resources (EVR).
Teck’s board on Thursday again asked shareholders to vote on April 26 for the company’s separation, while noting that Glencore’s revised proposal is still not in the best interest of Teck.
“Glencore has made two opportunistic and unrealistic proposals that would transfer significant value to Glencore at the expense of Teck shareholders,” Sheila Murray, Chair of the Board at Teck said in a statement.
“Teck’s proposed separation creates a significantly greater spectrum of opportunities to maximize value for Teck shareholders.
Meanwhile, Teck CEO Jonathan Price said the "fundamental flaws of Glencore’s revised proposal continue to make it a non-starter."
Following extensive consultation with shareholders, Teck said it is making changes to its own separation proposal, including reducing the minimum term of the royalty paid by EVR to Teck Metals from 5.5 years to 3 years, providing a potentially shorter path to the full separation of Teck Metals and EVR.
Meanwhile, the EVR spinout plan looks at putting in place measures to cap annual capital spending by EVR at $1.3 billion, with exceptions for social and regulatory requirements.
Teck is a diversified resource company focused on copper, zinc, and steelmaking coal, which is also known as hard coking coal or metallurgical coal, and oil.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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