$70 billion merger will base new copper giant in Vancouver with $800 million in projected annual synergies
The mining sector is set for a major shift as Teck Resources and Anglo American agreed to merge in a deal valued at about $70bn, creating one of the world’s largest copper-focused companies.
BNN Bloomberg reported the merger would be the biggest mining deal in a decade, while Reuters noted it ranks as the second-largest in industry history.
The combined company, Anglo Teck, will be headquartered in Vancouver with a market capitalisation above US$53bn, as reported by Reuters.
Anglo shareholders will hold 62.4 percent of the new entity, while Teck investors will own 37.6 percent.
The companies said the board will be split evenly, with Teck chair Sheila Murray taking the role of chair and Anglo CEO Duncan Wanblad retaining his position.
Teck CEO Jonathan Price will serve as deputy CEO.
According to BNN Bloomberg, the deal includes about $4.5bn in spending commitments in Canada over five years.
Price said the merger would give the company greater financial capacity to advance domestic projects, such as Galore Creek.
British Columbia Premier David Eby called the agreement a “remarkable vote of confidence” in the province’s role in Canada’s economy.
The merger is projected to generate about US$800m in annual pre-tax synergies.
Those efficiencies include potential integration between Teck’s Quebrada Blanca mine and Anglo’s Collahuasi project in Chile.
While Quebrada Blanca has faced operational setbacks, National Bank analyst Shane Nagle told BNN Bloomberg that investors may be undervaluing Teck’s portfolio.
Shares of both companies rose following the announcement, with Teck advancing more than 14 percent on the Toronto Stock Exchange and Anglo gaining more than 8 percent in London, according to Reuters.
The transaction is structured as an all-share, zero-premium merger, with Anglo also paying a US$4.5bn dividend to its shareholders, as per Al Jazeera.
Analysts at Berenberg noted to Reuters that the lack of premium leaves room for possible rival bids, particularly from Glencore or BHP.
The companies expect the deal to close within 12 to 18 months, subject to shareholder and regulatory approval.
Owners of nearly 80 percent of Teck’s class A shares, including Norman Keevil, have already pledged their support, BNN Bloomberg reported.
