Teck Resources Ltd. and Anglo American PLC have reached an agreement to merge, creating a copper-focused powerhouse valued at approximately $70 billion. Described as a “merger of equals,” the deal entails a balanced distribution of upper management and board representation between the two companies, despite Anglo American’s higher valuation compared to Teck.
The newly formed entity, named Anglo Teck, is set to relocate its headquarters to Vancouver, emphasizing the potential benefits of the merger for Canada. Teck’s CEO, Jonathan Price, highlighted the significance of establishing the largest head office in Vancouver and the unprecedented move of Anglo American’s global headquarters to Canada.
Under the terms of the agreement, Price will assume the role of deputy CEO in the combined company, with Anglo American’s CEO, Duncan Wanblad, and CFO, John Heasley, relocating to Vancouver to maintain their positions within Anglo Teck. Sheila Murray will serve as the chair of Anglo Teck, with board seats evenly divided between the merging companies.
The proposed merger is subject to review under the Investment Canada Act, which assesses deals for alignment with national interests. The federal government, through Industry Minister Mélanie Joly, will scrutinize various aspects of the merger, including commitments to base senior leadership in Canada and allocate approximately $4.5 billion in spending to the country over five years.
Anglo Teck intends to retain listings on the London and Johannesburg stock exchanges while seeking listings on the Toronto and New York stock exchanges. Despite maintaining its incorporation in London for technical and capital-related reasons, Wanblad emphasized that the company’s essence as a Canadian entity would remain intact.
The agreement offers Teck shareholders 1.3301 Anglo American shares per class A and B share held. Additionally, Anglo American plans a $4.5 billion dividend payout to its shareholders to balance the combined company’s valuation. The merger is expected to yield pre-tax annual synergies of around $800 million USD and enhance the value of the Quebrada Blanca project in Chile by leveraging synergies with the Collahuasi mine.
While facing operational challenges at the Quebrada Blanca project, Teck remains optimistic about the merger’s benefits for investors. The deal, which does not involve a premium for Teck shareholders, promises exposure to a leading copper-focused company globally.
Shareholders of both companies have responded positively to the merger, reflected in the surge of Teck’s shares by over 14% on the Toronto Stock Exchange and Anglo American’s shares by more than 8% on the London exchange. The completion of the merger, anticipated within the next 12 to 18 months, is contingent upon regulatory and shareholder approvals, including a requisite two-thirds majority vote by Teck’s class A and B shareholders and a majority vote by Anglo American shareholders. Over 79.8% of Teck’s class A shares owners have already committed to voting in favor of the merger, underscoring the support from key stakeholders.