Glencore reaches out to a Canadian copper producer.
(Photo: Bloomberg/Getty Images)
Zurich Glencore reaches for the Canadian mining group Teck Resources: The Swiss commodities trader is offering Teck shareholders $23 billion in treasury shares, the company announced on Monday. The offer became public after Teck Resources had rejected the previously unknown deal in a statement.
For Glencore, it would be the biggest deal since the Swiss commodities trader merged with the Xstrata mining group in 2012. The company hopes the merger will result in synergy effects of four to five billion dollars. Teck operates four copper mines in North and South America. Together, both companies could become one of the world’s largest copper producers.
In addition, Teck Resources is a major producer of coke coal, which is required for steel production. For its part, Glencore has large coal mines, which, however, mainly produce fuel for power plants. According to the takeover bid presented on Monday, Glencore CEO Gary Nagle intends to split the merged industrial metals business and coal production of the two groups into two separate companies.
Glencore CEO Nagle wants to herald the start of the coal phase-out. In a second step, Nagle could list the merged coal business separately. For some time now, Nagle has been faced with the demand to spin off Glencore’s coal business. Glencore management has always rejected this.
Last year, the coal business contributed a good half to the record profit of 34.1 billion dollars. In view of this profit, Glencore can easily afford the billions: The Swiss group also used last year’s profit to reduce debt. Since then, the group has been almost debt-free.
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