Teck Resources Ltd (TSX:TECK.B) shares rose on Monday after Australian mining giant BHP Group Ltd. confirmed it would no longer pursue a takeover of Anglo American PLC, leaving the Vancouver-based miner’s $70 billion merger with Anglo American on track.
Teck’s Canadian-listed shares climbed 2.4%, mirroring gains in its New York-traded stock, as investors reacted to the reduced risk of a rival bid disrupting the planned combination.
BHP said it had held “preliminary discussions” with Anglo American’s board but would instead focus on its own organic growth plans. The company noted it still saw “strong strategic merits” in a potential merger but will not proceed.
The proposed Anglo-Teck merger, which would create a copper mining powerhouse with a head office presence in Vancouver, is set for a shareholder vote in early December. The deal is also under review by the Canadian government, which is scrutinizing the transaction under the Investment Canada Act to ensure it aligns with Canada’s economic security interests.
Teck CEO Jonathan Price has previously expressed confidence in federal discussions, while the companies have committed to roughly C$4.5 billion in Canadian investment over five years, including Teck’s previously announced Highland Valley mine life extension.
Analysts see the merger as a major strategic move. Jefferies said Anglo and Teck are among the most coveted targets in the mining sector due to their significant copper assets in low-risk regions. “The Anglo-Teck merger should close, and ‘Anglo Teck’ shares should perform well even though the merger is expected to be significantly free cash flow-dilutive for Anglo over the first three years,” Jefferies wrote.
BHP’s withdrawal may allow Teck and Anglo American to consolidate without interference.
The deal is expected to deliver synergies including $800 million in annual pre-tax corporate cost reductions and an additional $1.4 billion in annual EBITDA benefits from increased copper production.