Teck Resources pushes for restructuring, says Glencore bid ‘flawed’

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(Reuters) -Canada’s Teck Resources (NYSE:TECK) on Monday reinforced its rejection of an unsolicited $22.5 billion bid from Glencore (OTC:GLNCY), calling it “an illusion” and telling shareholders that its proposed restructuring is the only option on the table.

Glencore’s offer, made public on April 3, includes a plan to simultaneously spin off the companies’ thermal and steelmaking coal businesses and rebrand the remaining company as GlenTeck.

Talking to shareholders on Monday, Teck Chief Executive Jonathan Price said that more value could be unlocked through a proposed restructuring in which the Vancouver-based miner would spin off its steelmaking coal unit to focus on copper and other industrial metals.

A shareholder vote on Teck’s proposal is scheduled for April 26. If it passes, the separation process will then take 6-8 weeks to complete.

“A vote against the separation is a vote to maintain the status quo at Teck, and there is no path that includes Glencore acquiring Teck,” Price said.

“The modest implied premium in the Glencore rejected proposal is an illusion,” he added. “Scale and diversification do not create value if the quality of the business is contaminated.”

Teck said its board has rejected the offer as Glencore did not present a coherent plan for its proposed coal company, adding that the deal would expose its shareholders to thermal coal, oil, LNG and related sectors.

Analysts had last week seen room for an higher offer from Glencore to sway Teck shareholders in its favour.

Glencore boss Gary Nagle called it a “very compelling all-share offer,” representing a 20% premium to Teck’s closing stock price on March 26, when the bid was made privately.

“This is not just about price,” Price said on Monday. “We also see serious structural flaws in the proposal that Glencore has put forward, and we believe that (it) would destroy value for Teck shareholders, and that it has significant execution risks.”

Price also said that Teck is open to partnering with Glencore and other companies on “the creation of …joint venture to unlock regional synergies.”