GLENCORE hoped to have further discussions with Teck Resources regarding a merger of the two businesses despite the Canadians firmly rejecting the $22bn transaction today.
Glencore announced an all-share offer in which it would pay a 22% premium for Teck’s A and B class shares as of the group’s March 31 closing prices. But Teck’s board said it favoured spinning out its coking coal assets as per a transaction it announced in February.
In addition, Teck founder Norman Keevil, who is influential among the firm’s A class of shares, turned down Glencore’s proposal, saying “now is not the time” for a proposal of this ilk. Nagle argued, however, it would make sense for the board and senior management to hear the proposal. Contact with the Teck board had been “minimal”, Nagle said.
The merger would create single best metals company in the world, while the demerger and listing of both firm’s coal assets would fill a gap for such an investment in New York.
Nagle said he hadn’t abandoned hope of concluding the proposed merger even though he acknowledged Teck shareholders could nuke his firm’s ambitions when they voted on Teck’s announced coking coal demerger on April 26.
Nagle said he had “a very good relationship” with Jonathan Price, CEO of Teck Resources for less than a year. Said Nagle: “We would propose we sit down with Jonathan and the team and work through [the deal] …”. Nagle said he had absorbed Teck’s letter rejecting Glencore’s offer, adding: “We believe some of the issues we raised are not real issues”.
“We say that not because they don’t believe they are real issues, but with some work, and getting round the table, we think they are not issues,” he said. Glencore would demonstrate to Teck “… how they can be mitigated and how real value can be created by merging these two companies”.
Nagle also waved away the risk of anti-trust concerns. While there was “still work to be done”, Glencore was confident the merger would not attract the opposition of regulators.