ANGLO American and Teck Corporation today confirmed they had reached agreement on a “merger of equals” of the two miners.
To be named Anglo Teck with a valuation of $50bn, the company will be copper-focused, headquartered in Canada, and take a primary listing on the London Stock Exchange.
Duncan Wanblad, CEO of Anglo American will lead Anglo Teck with Teck Corproation CEO Jonathan Price taking the role of deputy CEO. The board would be drawn 50-50 from the two companies.
Anglo American will issue 1.33 ordinary shares to each Teck share held in both outstanding Teck class A common shares and class B subordinate voting shares in terms of which Anglo will own 62.4% and Teck shareholders 37.6% of Anglo Teck.
As of the last close of trading Teck was valued at C$23.7bn (£12.7bn), whilst Anglo American is worth £26.9bn. It will have secondary listings in New York, Toronto and Johannesburg.
In a sweetener for the deal, a special dividend will be paid to Anglo shareholders of $4.5bn ($4.19 per share) ahead of completion of the deal which is expected to take between 12 and 18 months to complete.
The transaction is a bold one for Anglo especially given that it last year fended off a takeover proposal from BHP whilst embarking on a once-in-a-generation restructuring it which it would divest of its platinum, diamond, coal and nickel assets.
“Having made such significant progress with Anglo American’s portfolio transformation, which has already added substantial value for our shareholders over the past year, now is the optimal time to take this next strategic step to accelerate our growth,” said Wanblad.
Critically, the merger has the support of Teck’s Keevil family which wields the A class voting shares – fundamental in blocking Glencore’s takeover attempt of Teck two years ago. Teck’s controlling shareholder Norm Keevil backed the deal, calling it a “powerful next chapter” for the company built by his family.
The logic for the deal is the fact the combined entity will have 70% of its production in copper, a metal tipped to run into major supply deficits in the years ahead. Anglo American produced 770,000 tons of the metal last year while Teck is set to produce up to 525,000 tons this year.
Both have plans to expand copper production, while they already own parts of a giant copper complex in Chile — the Collahuasi and Quebrada Blanca copper mines — which will be combined following the deal.
The companies estimated that the merger would deliver pre-tax annual cost savings of $800m.
“This merger of two highly complementary portfolios will create a leading global critical minerals champion headquartered in Canada – a top five global copper producer with exceptional mining and processing assets located across Canada, the United States, Latin America, and Southern Africa,” said Price.
