Seeking synergy: A coil of copper rod in a factory. A combination of the two companies would bring efficiencies to copper mining in Chile. — Reuters
London: Anglo American Plc has agreed to combine with Canada’s Teck Resources Ltd in one of the biggest mining deals in more than a decade.
Under the so-called zero premium deal, Anglo’s shareholders will own 62.4% of the combined company, while Teck holders will control 37.6%, according to a statement yesterday.
Anglo will also pay its investors a US$4.5bil special dividend ahead of the combination, which confirmed a Bloomberg News report that a deal was imminent.
The combination ranks among the biggest ever in the mining industry, and marks the culmination of several years of revived dealmaking among the largest players. If approved by regulators, the acquisition is expected to be completed in 12 to 18 months.
Teck, which had fallen roughly 20% in Toronto trading over the past year through Monday, has a market value of about US$17.2bil. It jumped more than 20% in after hours trading after Bloomberg reported the talks.
Anglo American shares have gained 15% over the same period, giving it a market value of US$36.5bil.
Both companies have been pursued by bigger miners in recent years: Anglo fought off a US$49bil approach from BHP Group last year, while Glencore Plc unsuccessfully tried to buy Teck in 2023.
Those failed bids kicked off a dealmaking frenzy, with executives across the industry spending much of the past two years running the numbers on their rivals to assess potential transactions.
The increased activity has largely been driven by the desire to expand production of copper – a metal essential to the global energy transition – as well as a fear of missing out after BHP’s bid for Anglo sent shock waves through the sector.
A Teck-Anglo combination has long been discussed behind the scenes.
Both companies have been seeking to simplify their businesses – Teck sold a majority stake in its coal business to Glencore, while Anglo has exited platinum mining and is in the process of trying to sell its own coal mines and offload its De Beers diamond unit.
The boards of both companies unanimously recommend the deal. Anglo’s chief executive officer Duncan Wanblad will head the new company, while Teck’s Jonathan Price will be deputy.
The combined mining company will be based in Vancouver, with corporate offices in London and Johannesburg.
The announcement of the deal could yet kick off fresh bids for Teck or Anglo.
In the statement, the agreement includes provisions that would allow either company to consider unsolicited proposals and for the deal to be terminated in the event of a superior proposal, according to the statement.
Teck’s flagship mine is the Quebrada Blanca 2 copper project in Chile. Anglo owns a stake in the neighbouring Collahuasi mine, which could offer opportunities to increase production and profits by combining the two operations.
For Anglo, successfully buying Teck could help make it less vulnerable to another potential takeover bid itself, though its offer could draw out interlopers
The news could also spur other rivals into action. Teck, which is controlled by the founding Keevil family, has been a focus for several of the industry’s biggest players because of its attractive copper assets, Bloomberg reported previously.
The family controls Teck through “supervoting” Class A shares, while its largest shareholder is China Investment Corp. The Keevil family is supporting the deal.
The deal will need the approval of the Canadian government, at a time when copper and other critical minerals have become viewed as increasingly strategic by governments around the world.
Canada said last year that it would only approve foreign takeovers of large Canadian mining companies involved in critical minerals production “in the most exceptional of circumstances.”
The deal follows setbacks for both companies. Teck began a review of the Quebrada Blanca 2 operation last week after being dogged by setbacks for years.
Anglo, meanwhile, recently saw its plans to sell its coal mines collapse and now faces the challenge of finding a new buyer. It is also trying to sell De Beers during one of the diamond industry’s deepest-ever crises. — Bloomberg
