Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) and South African giant Anglo American Plc [LON-AAL] have agreed to combine the two companies in a $50 billion all-share merger of equals to form, Anglo Teck Group, a global critical minerals champion.
The combined company is expected to rank as a top five global copper producer, with output of 1.2 million tonnes annually, headquartered in Canada, offering investors more than 70% exposure to the red metal, via a portfolio of operations, including six world class copper assets, alongside high-quality premium iron ore and zinc businesses.
Teck’s Class B common advanced on the news, rising 12.8% or $6.24 to $54.74. The shares trade in a 52-week range of $72.92 and $40.23.
The merger will be implemented by means of a plan of arrangement through which Anglo American will issue 1.3301 ordinary shares to the existing Teck shareholders in exchange for each outstanding Teck Class A common share and Class B voting share, consistent with a merger of equals at market. Subject to the satisfaction of certain conditions, the Anglo American board also intends to declare a special dividend of US$4.5 billion (expected to be US$4.19 per ordinary share to be paid by Anglo American to its shareholders on the Anglo American register of members ahead of completion of the merger.
At or prior to completion, Anglo American and Teck will each nominate for appointment 50% of the non-executive directors of the Anglo Teck board, with Sheila Murray serving as Chair of Anglo Teck upon completion, at which point the executive directors of the combined company will be Duncan Wanblad as CEO, Jonathan Price as Deputy CEO and John Heasley as CFO. The CEO, Deputy CEO and CFO and a significant majority of the senior executive team will be based in and reside in Canada, with the senior executive team including meaningful representation from South Africa and the United Kingdom.
The combined company will emerge as a top five global copper producer with combined annual copper production of 1.2 million tonnes, increasing by 10% to 1.35 million tonnes from a portfolio of long-life assets including the Collahuasi, Quebrada Blanca, and Los Bronces mines in Chile, the Antamina and Quellaveco mines in Peru and Highland Valley Copper mine in British Columbia.
Ango Teck will also rank as a major producer of iron ore, and one of the world’s largest producers of zinc via the world-class Red Dog mine in Alaska and fully-integrated zinc and lead smelting and refining facilities at Trail, B.C.
The combined company is looking to pre-tax recurring annual synergies of US$800 million, and an additional US$1.4 billion of underlying EBITDA revenue synergies between the adjacent Collahuasi and Quebrada Blanca operations on an average pre-tax annual basis from 2030 to 2049, which is expected to result in an increase of 175,000 tonnes of potential additional copper production.
