Top Stories This Week: Gareth Soloway Gives Gold Target, Glencore/Teck Battle Intensifies

Teck holds firm against Glencore's advances

Last week's update covered diversified miner Glencore's (LSE:GLEN,OTC Pink:GLCNF) hostile takeover bid for Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK), and this story is still making headlines as new developments emerge.

As of Wednesday (April 19), Teck had rejected two acquisition proposals from Glencore, prompting Glencore to write an open letter to Teck's Class B shareholders — in it, the company emphasizes the benefits of its plan to merge with Teck and create two standalone businesses, and says it is willing to make an offer directly to shareholders.

"Glencore is willing to make an offer directly to Teck shareholders if the Proposed Teck Separation does not proceed and Glencore believes that this is required where there continues to be no engagement from the Teck Board" — Glencore

Glencore also says it is open to improving its terms, although it doesn't specify how it might do so.

This situation is changing quickly, but Teck has already responded to Glencore, saying its proposal "is not a realistic or viable option," and pointing out that it has in fact engaged with Glencore. Teck urged its shareholders to vote on April 26 for its own separation plan, which would split the firm into a metals company and a steelmaking coal business.

"We fully believe that Glencore’s proposals are nothing more than an opportunistic attempt to interfere with the vote at Teck’s annual and special meeting of shareholders on April 26th to their benefit and to the detriment of our shareholders" — Teck Resources

It's worth noting that Teck Chairman Emeritus Dr. Norman B. Keevil is not in favor of Glencore's proposal, although he would support a transaction "with the right partner, on the right terms" after Teck's separation.

Well-known mining industry figure Robert Friedland has also weighed in — while he respects both Teck and Glencore, he said a sale to Glencore would be "short-sighted … without exploring Teck's valuable opportunities across the industry."

Elsewhere, market participants have expressed concerns about a Canadian business being acquired by a foreign entity, especially during a time when having secure supply of metals is becoming increasingly essential.