Anglo American, Teck shareholders OK $53B merger

Anglo American (LSE: AAL) and Teck Resources (TSX:TECK.A | TECK.B) announced their shareholders on Tuesday approved a $53-billion merger vying to be the largest mining deal of the decade.

The all-stock, nil-premium $53-billion transaction, first announced in September, would create a major global copper heavyweight. The resulting company could rank among the world’s top five copper producers with annual output of around 1.2 million tonnes. 

The proposed deal must still be formally approved by Ottawa under the Investment Canada Act based on the deal representing a net economic benefit to Canada, although reports have emerged that a defacto yes is already in place because of time limits. 

This approval “represents the most significant obstacle to completion,” Shane Nagle, a National Bank Financial mining analyst, said Tuesday in a note. There is “limited” potential of a competing bidder emerging for Teck “given the required approvals from the Canadian Government are likely an impediment to other large-cap copper companies,” he added.

Teck’s widely traded Class B shares rose 0.8% to close at C$61.95 apiece on Tuesday in Toronto, boosting the company’s market value to about C$30 billion. The stock has traded between C$40.23 and C$67.55 in the past year. Anglo American fell 0.5% to close at £29.16 in London.

Redomiciling

“We are delighted with the clear endorsement from our shareholders to take this next strategic step to unlock outstanding value as Anglo Teck,” Anglo American CEO Duncan Wanblad said in a news release. 

“Together, we will form a global critical minerals champion, headquartered in Canada, and offering more than 70% exposure to copper, underpinned by a world-class portfolio of assets with exceptional growth optionality,” Wanblad said.

There’s been some debate whether the deal would proceed. Anglo commented that it didn’t want to engage in redomiciling to Canada, a move that would effectively transform it into a Canadian company, and federal Industry Minister Mélanie Joly said that wasn’t good enough. 

The push back came after decades of foreign takeovers that stripped Canada of major mining champions, including Alcan, Falconbridge and Inco. 

Anglo has offered to shift its global headquarters to Vancouver from London, rebrand as Anglo Teck, and relocate senior executives, including CEO Wanblad and Chief Financial Officer John Heasley.

BHP offer

The merger vote comes after BHP (NYSE, LSE, ASX: BHP) briefly attempted to buy Anglo last month before abandoning its offer three days later. 

Anglo has long been seen as a takeover target thanks to its copper portfolio, though its diamonds and platinum businesses have complicated past bids. 

On Monday, Anglo dropped a proposal to change executive bonus awards from the agenda of Tuesday’s shareholder vote after investors objected to the plan. 

Anglo American noted the incentive plan was meant to support the deal and help retain senior leaders as the merger would shift the company’s headquarters to Canada.

“With the removal of this resolution, we suspect the Teck combination proposal will be strongly backed by Anglo shareholders,” analysts at Peel Hunt wrote then. 

Both companies have undergone significant restructuring in recent years, driven in part by previous takeover attempts. Teck sold its steelmaking coal business to Glencore (LSE: GLEN) in 2023, leaving the Vancouver-based miner focused primarily on copper and zinc.

Anglo American, meanwhile, has moved to exit a range of businesses it no longer sees as strategic, including agreeing to sell its steelmaking coal assets to Peabody Energy and divesting its nickel business. It is also trying to sell its De Beers diamond unit as it sharpens its focus on copper, iron ore and crop nutrients.