Glencore proposed introducing a cash component to its $22.5bn bid for Teck Resources on Tuesday and urged its board to delay an impending vote on a restructuring.
Vancouver-based Teck responded by saying the revised offer was "largely unchanged", after on Monday it repeated its rejection of the bid, which includes a plan to simultaneously spin off the companies' thermal and steel-making coal businesses and rebrand the remaining group as GlenTeck.
Teck added that its board will "review and evaluate" the offer. Its chief executive Jonathan Price had told shareholders on Monday that a restructuring in which Teck would spin off its steel-making coal unit to focus on copper and other industrial metals was the only viable option.
Glencore is now proposing that Teck shareholders receive 24 percent of the combined metals group and up to $8.2bn in cash for those who may not want exposure to thermal coal, which is the most polluting fossil fuel.
"The revised proposal does not provide an increase in the overall value to be received by Teck shareholders or appear to address material risks previously raised," Teck said.
Material risks would include exposing its shareholders to a big thermal coal business and having an oil marketing business within the base metals vehicle, Teck said on April 3 when the offer was made public.
Canada's Keevil family, which has so far supported the rejection of Glencore's bid, controls Teck through its dominant ownership of 'A' class of shares, which have more voting power than the numerous 'B' class shares held by institutions.
"This revised proposal from Glencore helps, but we continue to expect a bump as we believe the premium offered so far is not high enough to get strong support from Teck's Class B shareholders," said Jefferies analyst Chris LaFemina.
"Getting Teck's Class A shareholders on board is a separate, more substantial challenge," LaFemina added.
Reuters on Monday reported that Glencore chief executive Gary Nagle plans to meet with some of Teck's Canadian shareholders in Toronto on Thursday to personally lobby them for support.
"We see no valid reason not to delay your shareholders meeting in respect of the Proposed Teck Separation in order to allow for discussions and due consideration of our Proposed Transaction," Nagle said in its letter to Teck's board.
A vote on Teck's plan is scheduled for April 26.
If it passes, the separation will then take 7-8 weeks to complete.
By CityAM
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