Teck Resources Ltd.'s move to cancel a key shareholder vote on its plan to separate its businesses may be seen as a win for Glencore in its ongoing campaign to acquire the Vancouver-based mining company.
But Teck is standing by its assertion that the offer by the Swiss commodities giant remains a "non-starter," and Teck CEO Jonathan Price indicated Wednesday the company may be receptive to other suitors.
"We have premium businesses. And when it comes to M&A, we firmly believe that competition for assets drives value," Price told a conference call with analysts.
Teck announced just hours before its annual meeting Wednesday that it will not go ahead with the vote on its plan to split its metals and steelmaking coal businesses into two companies.
The move suggested the company did not believe it had the two-thirds approval from shareholders required for its proposal, which would have split the company into Teck Metals and Elk Valley Resources (EVR).
But Price said shareholders have made it clear that they still like the idea of generating value by separating Teck's steelmaking coal assets from its metals business. He said the company will now pursue a "simpler and more direct approach" to do that.
Price declined to elaborate on options the company may be considering. He also declined to say whether Teck has been approached by any other prospective buyers.
"I won't speculate in any detail on that," Price said. "But suffice to say that the process we've been through over the last two months, which of course has been a very public one, has seen a significant interest in both businesses, EVR and Teck Metals. And it's very clear that the value of those businesses is well-recognized."
Glencore, which declined to comment Wednesday, had been urging Teck shareholders to reject the company's separation proposal. The Swiss company has said all along it would be unable to pursue its own hostile takeover bid if Teck's plan to separate its businesses went ahead.
Price suggested that additional buyers could come forward once Teck splits its coal assets from its metals business.
"We expect there would be significantly more interest in the businesses on a stand-alone basis," he said. "And that is one of the reasons we continue to believe that separation is the right path forward here."
Teck is controlled by the Keevil family, which owns the company's class A shares together with Japanese company Sumitomo Metal Mining Co. Ltd.
Teck chairman emeritus Norman Keevil has said Glencore's proposal is the wrong one, at the wrong time, but that he is open to talking about other possible deals once the company completes its own plan to split its business.
The unsolicited pursuit of what is Canada's largest diversified mining company by an international giant has triggered sentiments of economic nationalism.
B.C. Premier David Eby, the Mining Association of B.C., as well as the Greater Vancouver Board of Trade have expressed concern over the potential for job losses and cast doubt upon Glencore's ESG record.
In a letter to the Greater Vancouver Board of Trade dated April 24, three senior federal cabinet ministers said Ottawa is watching the situation "very closely."
"We need companies like Teck here in Canada," stated the letter, which was signed by Deputy Prime Minister Chrystia Freeland, Industry Minister François-Philippe Champagne and Natural Resources Minister Jonathan Wilkinson.
It remains unclear whether Ottawa would go so far as to block a potential acquisition of Teck by Glencore. But some observers have pointed out Glencore's pursuit of the Canadian company comes at the same time that the government has committed to a national critical minerals strategy as part of its overall climate plan.
Teck is keen to expand its copper and zinc production to meet growing global demand for these metals, both of which are used in the production of electric vehicles and are considered to be key resources for the coming energy transition.
This report by The Canadian Press was first published April 26, 2023.
Companies in this story: (TSX:TECK.B)
Amanda Stephenson, The Canadian Press