- Teck Resources Ltd. (TSX:TECK) has agreed to sell a majority stake of its coal business to Glencore (OTC:GLCNF)
- The Vancouver-based miner will sell its steel-making coal unit for US$9.0 billion to the Swiss mining firm and its consortium of steelmakers
- The steelmaking coal business, Elk Valley Resources, will continue to operate in Canada through a Vancouver head office and regional offices in Calgary and Sparwood, B.C.
- Teck Resources Ltd. last traded at C$50.57 per share
Teck Resources Ltd. (TSX:TECK) has agreed to sell a majority stake of its coal business to Glencore (OTC:GLCNF).
The Vancouver-based miner will sell its steel-making coal unit for US$9.0 billion to the Swiss mining firm and its consortium of steelmakers Nippon Steel Corp. (PINL:NPSCY) and Posco Holdings Inc. (PINL:NPSCY), which currently owns minority stakes in Teck’s coal mines, and will own the rest. Glencore will pay US$6.93 billion for a 77 per cent stake in Teck’s business.
Teck had repeatedly rejected a takeover bid from Glencore for months, including an unsolicited US$23 billion offer, which had disrupted its earlier plan to spin off its coal business.
The steelmaking coal business, Elk Valley Resources, will continue to operate in Canada through a Vancouver head office and regional offices in Calgary and Sparwood, B.C., including completing the construction of a new Sparwood office.
Glencore intends to put the combined coal operations into a new company listed on the New York Stock Exchange within two years of the acquisition closing.
Meanwhile, Teck intends to use the proceeds to improve its net leverage through debt reduction, the retention of additional cash on the balance sheet, and payment of transaction-related taxes, which are estimated to be approximately US$750 million.
“This transaction will be a catalyst to refocus Teck as a Canadian-based critical minerals champion with an extensive portfolio of copper growth projects, unlocking the full value potential of the company,” Jonathan Price, president and CEO of Teck said in a news release. “This sale will ensure Teck is well-capitalized and able to realize value from our base metals business and deliver strong returns to our shareholders while maintaining a robust balance sheet. Glencore has made strong commitments that will create new benefits for Canada and the Elk Valley and ensure responsible stewardship of the steelmaking coal operations for the long term.”
Teck Resources Ltd. is a mining company that operates in copper, zinc, steelmaking coal and energy segment.
Teck Resources Ltd. last traded at C$50.57 per share. Teck stock has risen 82.09 per cent in the past year.
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