As predicted in these pages a few weeks ago, Glencore has now sweetened its offer for Teck.
Previously, Glencore was simply offering to subsume Teck, as it has subsumed so many other miners, and then to spit out the combined coal assets of both companies into a new vehicle.
Now, it’s offering a cash component of up to US$8.2bn to buy Teck shareholders out of their coal exposure completely.
Since Teck has so far rejected Glencore’s proposals, the latest move is likely designed more to get a meaningful dialogue going than as a final statement of terms.
And it does have a certain appeal. The ongoing restructuring that Teck is undertaking and which Glencore has barged into is designed to offload the portfolio of unfashionable, though not always unprofitable Canadian coal assets. Hard cash may speak more loudly than corporate cleverness and equity in this instance.
And if Glencore does succeed in initiating a dialogue, then we can expect further revisions to the offer.
But Teck is not pleased.
Teck’s ownership structure, which includes A and B shares, and which vests significant power to the Keevil family, remains a major hurdle.
There have been three generations of Keevils at the helm of Teck, and that leadership has along the way also imbued the company with a certain degree of pride in its Canadian nationality.
We know Teck is Canadian, in a way that isn’t necessarily true with other companies.
Glencore, for example, epitomises - although not solely – the kind of faceless and nationality-free corporate entity that has grown ever more powerful in the past few decades.
Yes, its trading arm was famously headquartered in Switzerland, but somehow you don’t see the Swiss talking up their connection to Glencore. And Glencore also has a London end, which was significantly bolstered when it gobbled up Xstrata as the first mining boom cycle of the century was winding down.
That deal started off all sweetness and light, but turned acrimonious towards the end, and you couldn’t blame the decision makers at Teck if they took a look back at the history books and said no, thank you very much.
Cash is cash, though, and Glencore is clearly beginning to build up a head of steam.
And so, the Canadian identity may become ever more important if other shareholders start to desert the Keevils.
How does Canada look in this regard? Not like the British, surely, who have famously been careless in allowing national champions and industrial assets to slip out of their control, from British Steel, to British Leyland to British Coal. The word ‘British’ has even been removed from BP’s official name.
The Australians are more watchful and predators as a rule have been more cautious over there. Deals do get done, but rarely at a strategic level. That’s why Shell’s acquisition of Woodside was blocked in 2001, but Newcrest can quite comfortably be on the block in 2023. No-one minds if Australia’s major gold producer changes hands, because Australia has plenty more gold. Oil, though, is thinner on the ground for Lucky Country.
Now, what about Canada?
Teck’s status as one of Canada’s favoured sons/daughters/non-binary folks might in theory be enough to keep the Swiss-English-globalist behemoth at bay.
After all, championing the cause of a local Canadian company like Teck might help him President Trudeau win back some of the huge swathe of blue-collar voters he’s managed to alienate over the years.
But it might not, given that he has already restricted their right to protest freely, and - in a significant first for a Western country – initiated wholesale freezing of the financial assets of political dissidents.
But perhaps more to the point, if President Trudeau were to reach out across the political barricades, would anyone even notice in this era of information bubbles, overload and firestorms?
There might not be so much political capital in it for him after all.
So is Teck a strategic Canadian asset?
Well, according to Investopedia, and if you discount Nutrien, which is largely a producer of agricultural products, then Teck is Canada’s biggest miner. Barrick is next, but Barrick is famously focussed on gold.
So, at stake here is control of Canada’s largest producer of strategic metals. That’s big in and of itself. But even here, it could cut both ways. President Trudeau’s detractors would call him a ‘metropolitan elite’, and people who fall into that demographic generally have unfavourable views about the mining industry in general. It might not be bad if Canada moved out of the mining business altogether.
But - this is Canada’s biggest miner, and Canada doesn’t have that many major, globally significant industries. Just try and name another? Fishing? Neil Young? Tourism?
Teck rings in at number 20 on the list of the world’s biggest mining companies overall, and that’s not something to be taken lightly.
So, there can’t be any doubt that this issue will have come across President Trudeau’s desk. The question now is: will he do anything about it?
Because if not, and Glencore sets its mind to it, then Teck’s days may be numbered.