Miningweb: Anglo American-Teck merger sparks unease in Canada

Key topics:$50bn Anglo–Teck merger faces scrutiny over valuation concerns.Canada’s Investment Act review could complicate regulatory approval.Critics fear loss of Canadian mining champion and influence.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 Kerry Lanaghan.According to a report by our partners at the Financial Times, Anglo American's proposed $50bn merger with Teck Resources has triggered unease in Canada, despite broad support from major institutional investors. The all-share, nil-premium deal, announced last week, would combine the two miners into "Anglo Teck," headquartered in Vancouver but retaining its primary listing in London.While the transaction has the backing of Teck's controlling shareholder, Norm Keevil, who holds most of the company's supervoting shares, some Canadian investors and commentators see the timing and structure as problematic. Teck's share price had been weakened by operational issues at its Quebrada Blanca mine in Chile, prompting concerns the merger undervalues the company."Teck can easily create more value just by executing their business plan," said Bryan Pilsworth, a portfolio manager at Toronto investment firm Foyston, Gordon and Payne. Other investors expressed disappointment at the absence of the typical 20-30% takeover premium. Teck countered that the 20% share price jump since the announcement represented a "significant premium," insisting opportunities of this kind "don't wait."Regulatory approval could prove to be the biggest hurdle. Canada strengthened its Investment Canada Act (ICA) after Glencore's failed 2023 bid for Teck, increasing scrutiny on foreign takeovers of critical mineral producers. Although Anglo Teck has promised to base its headquarters in Vancouver, some critics dismiss the move as cosmetic. "We're a mining nation but don't have a single company in the global top tier," said Heather Exner-Pirot of the Macdonald-Laurier Institute. "This deal seems structured in a way to skirt those concerns."Government reactions have been mixed. Industry minister Mélanie Joly welcomed the merger as a "vote of confidence" in Canada's mining sector but confirmed it would undergo an ICA review. British Columbia Premier David Eby hailed the deal as beneficial to the province. By contrast, former finance minister John Manley argued the transaction amounted to "a takeover by Anglo," not the "merger of equals" presented by the companies.The review process, expected to take 12-18 months, leaves time for rival bids from global mining giants such as BHP or Glencore. Both of these companies previously attempted to acquire either Anglo or Teck. Analysts suggest this uncertainty could weigh on investor sentiment.Scotiabank's Orest Wowkodaw summed up the scepticism: "The relatively modest implied premium, along with the loss of a Canadian mining champion and the primary listing, are all disappointments." Still, some fund managers see strong operational synergies, particularly in South America, where Anglo's Collahuasi mine and Teck's Quebrada Blanca project are located.For now, the Anglo-Teck deal hangs in the balance, caught between promises of global scale and deepening questions about national interest.

Miningweb: Anglo American-Teck merger sparks unease in Canada

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