Anglo, Teck strike $50B merger in decade’s top deal

Anglo American (LSE: AAL) is acquiring Teck Resources (TSX: TECK.A TECK.B, NYSE: TECK), Canada’s largest diversified miner, in a $50-billion (C$69-billion) all-share deal that would create the world’s fifth-largest copper producer – if regulators in Canada, the United States and China sign off.

Anglo will exchange 1.3301 shares for each Teck share, a structure it called a “zero-premium” merger. The math tells a different story: the exchange ratio represents a 17% premium on Teck’s closing price Monday, though Anglo will offset it with a $4.5-billion special dividend to its investors, leaving the effective premium at just 1%.

If completed, Anglo shareholders will own 62% of the new company, to be named Anglo Teck, while Teck shareholders will hold 38%. Anglo CEO officer Duncan Wanblad will lead the combined miner, with Teck CEO Jonathan Price as deputy CEO. The board is to be a 50-50 combination. 

Shares in Anglo American gained 8.9% to about £24.83 apiece on Tuesday afternoon in London, valuing the company at £29.2 billion ($39.5 billion). Teck class B shares rose more than 14% to $40.17 each in New York for a market capitalization of $19.6 billion. 

Copper assets

Duncan Hay, mining analyst at London-based investment bank Panmure Liberum, qualified the merger as a “significant coup” for Anglo American. “If they are successful it is a great move as they’re locking up high-quality copper assets that the industry has been coveting,” Hay wrote.

The merger is aimed at securing copper supply amid soaring demand for the metal, essential to electrification and renewable energy. Teck’s Quebrada Blanca mine in Chile, plagued by cost overruns and operational challenges, is central to that strategy. Both Anglo and Teck have shed assets in recent years to focus on critical metals, with Teck selling most of its coal unit to Glencore and Anglo moving to exit coal, platinum and diamonds.

Wanblad said the headquarters will be in Vancouver, while Anglo’s London office, where its stock is listed, will be “streamlined”. Secondary listings are planned for Toronto and Johannesburg, along with a New York float via American Depository Receipts.

Greater New York-based Gimme Credit issued a positive outlook on the merger for its expected delivery of “significant” value and growth. “The new company will emerge as one of the world’s leading copper producers, boasting a diversified portfolio of six copper production sites, along with iron ore and zinc operations,” senior bond analyst Franck Bekaert said in a note.

Canada clause

Other analysts at The Financial Times newspaper and Bloomberg News said the deal’s requirement to locate the new company’s headquarters in Canada would likely stave off competing bids from other majors such as Rio Tinto (NYSE, LSE, ASX: RIO), BHP (ASX: BHP) and Glencore (LSE: GLEN). 

Anglo rebuffed a $49-billion approach from BHP last year, while Glencore failed to acquire Teck in 2023. The new deal is the largest for the mining industry in a decade. Consolidation has been building across the industry as companies race to secure copper reserves.

Canada’s Industry Minister Mélanie Joly said the merger will undergo review under the Investment Canada Act to ensure it delivers a “net benefit” to the country.

“Any new investments must support our core mission of building one economy in the best interests of Canadians,” Joly posted on X.