Egerton Capital UK, one of Teck Resources’ (TSX: TECK.A/TECK.B; NYSE: TECK) top investors, has committed to support the Canadian miner’s intention to separate its base metals and coal businesses and simplify its share structure.
Teck’s plan, announced in February, requires approval from shareholders in the upcoming Apr. 26 vote. It already has the support of key stakeholders, including gold magnate Pierre Lassonde, who is planning to buy a stake in Teck’s spinoff coal company to protect it from a foreign takeover.
The miner’s controlling shareholder Norman Keevil, has also made clear he will not sell to a foreign company at any price.
Egerton Capital UK’s partner Teddy Molson told Bloomberg News he believes that splitting Teck into two autonomous companies is “much more attractive” to prospective buyers”.
The firm owns 2.25% of Teck’s class B shares, which makes it the seventh-largest holder of the stock.
Teck, Canada’s largest diversified miner, operates under dual-class structure in which the family of octogenarian mining magnate Norman Keevil owns the majority of class A “supervoting” shares, each worth 100 votes. The class B shares are worth one vote each.
The business split requires two-thirds support from both from both class A and class B shares, meaning that investors with a small percentage of the total voting rights could have the power to sink the company’s vision.
The Vancouver-based miner is urging investors to back the proposed restructuring while fending off a US$23-billion takeover bid by commodity trader and mining company Glencore (LSE: GLEN).
Glencore’s plan is to acquire Teck and then separate itself into two companies, with one unit holding assets in thermal and metallurgical coal along with its oil assets, and the other its base metals portfolio.
Teck’s chief executive Jonathan Price, who took the company’s top job in September, said on Monday that Glencore’s proposal was a structurally flawed deal and “a complete non-starter.”
Price added that an acquisition by Glencore would destroy value for the company’s shareholders as it would reduce their exposure to copper and expose them to “significant jurisdictional, ESG [environmental, social and corporate governance] and execution risks.”
If Glencore ends up acquiring Teck, the deal would go down in history as one of the world’s biggest-ever mining takeovers.
