Teck Resources Ltd. and Anglo American PLC have reached a monumental agreement to form a copper-focused powerhouse valued at approximately $70 billion, marking one of the largest mining deals in the last ten years globally. Described as a “merger of equals,” the proposal aims to balance upper management and board representation between the two companies, despite Anglo American’s double valuation compared to Teck.
The newly formed entity, to be named Anglo Teck, will have its headquarters relocated to Vancouver, emphasizing the strategic advantages of the merger that will undergo regulatory scrutiny. Teck’s CEO, Jonathan Price, expressed enthusiasm for the deal, highlighting the significant establishment of the largest head office in Vancouver and the unprecedented move of Anglo American’s global headquarters.
Under the agreement, Price will assume the role of deputy CEO in the combined company, with Anglo American’s CEO Duncan Wanblad and CFO John Heasley relocating to Vancouver to maintain their positions at Anglo Teck. Sheila Murray, Teck’s chair, is poised to become the chair of Anglo Teck, with board seats evenly distributed between the merging entities.
The completion of the deal is contingent upon a review by the Investment Canada Act, which reserves the right to intervene in transactions deemed unfavorable to national interests. The Canadian government, through Industry Minister Mélanie Joly, will address various concerns during the merger evaluation, including the commitment of the combined firm to have its senior leadership based and residing in Canada.
Moreover, the agreement incorporates approximately $4.5 billion in spending commitments to Canada over five years, aiming to stimulate further development in the country. The merged company anticipates enhanced financial capacity to invest in substantial projects within Canada, such as Galore Creek, facilitated by a stronger balance sheet.
Anglo Teck intends to retain its listings on the London and Johannesburg stock exchanges while seeking additional listings on the Toronto and New York exchanges. The decision to maintain the company’s incorporation in London serves technical and capital exposure purposes, according to Wanblad, emphasizing that the essence of the deal remains rooted in advancing Canadian interests.
Addressing concerns about foreign acquisitions of Canadian mining firms, the merger between Teck and Anglo American stands as a manifestation of creating a prominent Canadian entity. The proposed exchange ratio involves Teck shareholders receiving 1.3301 Anglo American shares for each class A and B share they own, with Anglo retaining majority ownership in the combined entity.
Despite operational challenges at Teck’s Quebrada Blanca project in Chile, the merger is perceived as a beneficial move for investors, offering exposure to a leading copper-focused enterprise. The consolidation of the two companies is projected to generate significant pre-tax annual synergies and enhance the value of the Quebrada Blanca project through collaboration with Anglo’s Collahuasi mine.
The deal has garnered positive market response, with Teck’s shares surging over 14% on the Toronto Stock Exchange and Anglo American’s shares up by more than 8% on the London exchange. The completion timeline targets the next 12 to 18 months, subject to regulatory and shareholder approvals, with a $330 million US break fee in place. Approval requires a two-thirds majority vote by Teck’s class A and B shareholders and a majority vote by Anglo American shareholders, with strong support already secured from Teck’s key shareholders, including Norman B. Keevil.
The merger signifies a transformative phase for both companies, uniting two esteemed entities into a premier mining organization headquartered in Canada.
