Anglo American, a miner listed in London, and Canada’s Teck Resources have announced plans to merge, creating the world’s second-largest mining deal and forming a new global leader in copper, Anglo Teck.
The merger, pending regulatory approval, will see Anglo American shareholders owning 62.4% of Anglo Teck, while Teck shareholders will hold 37.6%.
Anglo Teck will be based in Canada but maintain its primary stock listing in London, with a combined market value exceeding $53 billion.
This deal positions Anglo Teck as the fifth-largest copper producer worldwide, marking a significant investment in copper by Anglo. The largest mining merger remains Glencore’s $90 billion acquisition of Xstrata in 2013.
With copper’s role in power and construction, demand is expected to rise, driven by electric vehicles and AI advancements.
While miners rush to launch new projects, there has been a surge in takeover bids, though no major acquisition has yet succeeded.
Both Anglo and Teck have restructured significantly in recent years due to external takeover pressures and strategic industry shifts.
Teck’s CEO Jonathan Price told Reuters that any potential bidding war for the merger is beyond their control.
Anglo faced a £39 billion takeover bid from BHP last year, which its board rejected. Teck also turned down a $22.5 billion offer from Glencore in 2023 but sold its coal business to them for $6.93 billion.
“We cannot predict a bidding war, and it’s out of our hands. Our focus is on securing approval for the merger,” Price stated.
He noted that the merger creates a larger, higher-quality copper, iron ore, and zinc business for shareholders.
“The deal itself is a robust defense,” said a source familiar with the Anglo and Teck negotiations.
The transaction involves a zero-premium, all-share structure.
This absence of a premium might encourage rival bids, but Anglo shareholders will receive a $4.5 billion special dividend.
“Interloper risk is a significant concern for this deal,” Berenberg analysts noted, highlighting potential interventions by Glencore and BHP.
While Anglo and Teck can still evaluate unsolicited offers, a $330 million break fee applies.
SHARES JUMP
Anglo’s shares in London rose over 9%, marking their largest daily gain in over a year, while Teck’s shares increased by 14% on the Toronto Stock Exchange.
“This consolidation is logical and merges complementary cultures,” said Adam Matthews of the Church of England Pensions Board, an Anglo shareholder.
“We hold both companies in high regard, and this move strengthens the industry,” he added.
Anglo CEO Duncan Wanblad will continue as CEO of the new company, with Teck’s Jonathan Price as deputy CEO.
Speaking from Vancouver, Wanblad described the merger as a “true merger of equals,” with the board equally composed of directors from both companies.
“We will gain a stronger, more resilient financial foundation, enabling us to dynamically allocate capital to the highest-returning opportunities,” he said.
The merger is expected to achieve $800 million in annual cost savings and efficiency gains by the fourth year post-completion, according to Anglo.
“As a merger, we can leverage the best of both companies without needing to pay a premium,” Wanblad explained.
The companies operate neighboring copper mines in Chile—Quebrada Blanca and Collahuasi—anticipating further operational benefits.
Quebrada Blanca, Teck’s flagship mine, faced production guidance issues due to a tailings problem, affecting its stock performance.
Price mentioned that securing regulatory approvals could take 12 to 18 months. Canada’s Keevil family, major holders of Teck’s A-class shares, supports the merger.
“We have unwavering backing from Dr. Norman Keevil and other A-share voters,” he confirmed.
A source suggested that maintaining headquarters in Canada, preserving Teck’s “Canadian legacy,” could facilitate regulatory approval in the country.
Canadian authorities previously opposed Glencore’s attempt to acquire Teck, and such concessions might deter rival bids lacking similar proposals.
