Miningweb: Anglo strikes nil-premium deal as Teck chooses legacy over higher bids - Javier Blas

Key topics:Anglo & Teck announce $50bn nil-premium merger to form copper giantKeevil family control and Ottawa rules limit rival bids for TeckPotential M&A battle looms with BHP, Glencore, and Rio Tinto circling.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Javier Blas.The market reaction was swift: Canada’s Teck Resources Ltd., surged nearly 25% the moment news leaked late on Monday of a potential takeover by larger rival Anglo American Plc. Wall Street bankers and analysts predicted a potential 40% premium. When the companies confirmed the deal a few hours later, there was absolutely nothing: Anglo and Teck said they were merging in a nil-premium deal to create one of the world’s largest copper miners.In theory, the lack of a significant premium opens the door to rivals to undo the $50 billion transaction with better offers. Think about BHP Group Ltd., which last year tried to buy Anglo, and Glencore Plc, which took a run at Teck in 2023. And, of course, Rio Tinto Plc, which under new management has sharpened its M&A ambitions.In practice, however, an interloper won’t have an easy path.First, look at why Teck is selling itself seemingly on the cheap. “We believe this is a merger of equals,” Chief Executive Officer Jonathan Price told me; he enumerated lots of Canadian goodies, such a headquarters in Vancouver, the company’s chair position and a 50-50 board split. Of course, that’s soft stuff, not cash. Ultimately, the founding Keevil family, which controls Teck via super-voting shares, appears to have accepted a lower price in exchange for legacy: Canada won’t lose its last big mining company..Read more:.Miningweb: Anglo and Teck to merge into copper giant - definitive defence against BHP, Glencore.When I asked Price whether Teck would welcome an interloper that offered a significant premium, perhaps 20% or higher, he was dismissive: “We think this is the best deal we could be doing.”Surely his institutional investors, particularly the hedge funds that have piled into the stock hoping for an M&A payday, will disagree with the national-flag-but-not-extra-money equation.Yet, they are prisoners of the complex ownership of Teck, which keeps Norman Keevil, the family patriarch, effectively in control for at least another three years. And they are captive, too, of Mark Carney’s government. His predecessor, Justin Trudeau, last year said Ottawa would only approve foreign takeovers of large national mining companies involved in critical minerals production such as copper, and that means Teck, “in the most exceptional of circumstances.” Any deal is only worth if it can close.The Keevils have won enough concessions from Anglo to sell the transaction at home as a merger of equals, rather than a takeover, even if Teck’s shareholders would ultimately own about 37.6% of the resulting company.Teck does have a point about the merger of equals: its shareholders would benefit from the significant benefits of putting together two huge mines in Chile: Collahuasi and Quebrada Blanca 2. These are effectively one as they dig the very same copper ore body from different angles. Combining the operations will result in hundreds of millions of dollars of savings per year. “The market has consistently unappreciated the synergies,” says George Cheveley at asset manager Ninety One Plc, which owns shares in both companies. Can anyone else offer enough Canadian prizes to assuage the national government? I doubt others would agree to move their headquarters to Vancouver and give away half of the board positions of the enlarged company, as Anglo has done. But Teck, with its huge copper mines, is a prize that makes everyone in the industry salivate; likewise Anglo. So never say never.History says we haven’t seen how this story ends. Two decades ago, Phelps Dodge, a big American copper producer, tried to buy in one swoop two Canadian rivals: Inco and Falconbridge. The deal would have reshaped the global mining industry. And it did, but not in the way that it looked initially. Soon after it was announced, the three-way combination collapsed. Ultimately, Phelps was bought by rival US-based copper miner Freeport-McMoRan Inc; Inco was taken over by Vale SA of Brazil, and Falconbridge ended in the hands of what today is Glencore. Maybe the same happens here, with BHP or Rio going after Anglo before it can close the deal.There’s another option: a repetition of the Glencore-Xstrata merger of equals. Back then, Glencore was forced to increase its initial cheap offer to win over Xstrata’s disgruntled shareholders. It’s not difficult to imagine an interloper – even Glencore itself — offering more money for Teck, forcing Anglo to offer a premium.There’s another possibility that would have many in the mining industry sweating: BHP may revive its bid for Anglo while Rio Tinto tries to buy Teck. That would be the stuff of bankers’ dreams. We have seen the starting gun of a race to consolidate the global mining industry. It's unclear who will be standing at the end..© 2025 Bloomberg L.P.

Miningweb: Anglo strikes nil-premium deal as Teck chooses legacy over higher bids - Javier Blas

Key topics:

Related Stories