JP Morgan expects Glencore to upgrade its offer for Teck Resources, especially now that the Canadian miner has dropped its own separation plans.
Glencore’s offer currently is worth around C$63 a piece for the B shares, but JP Morgan believes it can increase this to C$70, or a 19% premium to the close yesterday, valuing Teck at US$27bn or 50% above its value before the approach was made public.
London-listed Glencore has reiterated it is willing to make an offer directly to shareholders if Teck’s board won’t talk.
As it stands currently, the offer is 7.78 Glencore shares for the B shares and 12.73 for the A shares, which have ten times the voting power, with US$8.2bn earmarked as a cash alternative for investors who don't want a stake in the merged coal mining division.
JP Morgan’s rating on Glencore remains 'overweight'.