Teck Resources Drops Separation Plans, Will Seek Simpler Approach to a Split -- Update
April 26 2023 - 1:15PM
Dow Jones News
By Robb M. Stewart
Canadian miner Teck Resources Ltd. dropped plans to separate its
steelmaking coal operations from the company's base metals business
hours before shareholders were due to vote on the proposal.
It will instead look at options for a simpler break up.
Teck said shareholders it heard from were overwhelmingly in
favor of a split, but many would prefer a more direct approach to a
separation of the company.
Chief Executive Jonathan Price said the miner will reexamine
options that were considered before management pitched plans for a
separation to investors and the company also would see if there
were other opportunities to cut the coal assets away from the rest
of the company. Speaking to investors and analysts, Mr. Price
declined to put a timeline on the efforts.
Shareholders were set to vote later Wednesday at Teck's annual
meeting on a proposal that would've created two standalone
companies, but with ties between them that would have ensure the
coal operations helped fund copper projects that underpin the base
metals company. Teck had already tweaked its plans in response to
shareholders' concerns about the length of time it would take to
split the company, with the coal business, to be named Elk Valley
Resources Ltd., paying royalties to the base-metals unit, to be
named Teck Metals Corp., for at least three years rather than the
original proposal of at least five-and-half years.
Mr. Price said a takeover approach by metals and mining company
Glencore PLC remained a non-starter, though he added mergers and
acquisitions could play a role for Teck with the "right approach,
at the right time." The separation process had unearthed interest
in Teck's businesses, he said.
Analysts speculated Teck may now consider a full spin-out of the
coal operations or a possible sale of the assets, though Mr. Price
said all options would be looked at.
Mr. Price said that Teck was focused on a three-pronged strategy
that targets a separation, develops its copper projects and retains
strong cash returns.
Teck continues to ramp up its flagship Quebrada Blanca Phase 2
copper project in Chile to full production while it advances a
pipeline of copper projects and looks to optimize production at
existing operations, it said.
The company had the support for its proposed separation from its
controlling shareholders, Chairman Emeritus Norman Keevil and his
family and Japan's Sumitomo Metal Mining Co., which collectively
account for 48% of the total voting power over Teck via the
company's A shares.
Teck rejected a takeover bid from Glencore, which has said it
remains prepared to engage with Teck's board but is also
considering going directly to shareholders with its roughly $23
billion offer.
In afternoon trading, Teck's shares were up 4.2% on the Toronto
Stock Exchange, widening the advance so far this year to 20%. Teck
Class B shares gained 4.6% in New York.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
April 26, 2023 13:00 ET (17:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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