Sumitomo Metal Mining Co. Ltd., a key shareholder at Teck Resources Ltd., will vote in favour of the company's plan to separate its metals and steelmaking coal operations into two companies.
The Japanese company said in a statement Thursday that it has built a trusted partnership with Vancouver-based Teck in the mining business.
"As a shareholder of Teck, SMM confirms its continuous support for Teckʼs plan to create two separate world-class independent companies, which aims to generate long-term value for Teckʼs shareholders," the company said.
Swiss company Glencore is urging Teck shareholders to reject the plan in favour of its takeover offer for the Vancouver-based miner that would see them receive a stake in a combined metals company as well as a choice of cash or shares in a company that would hold their merged coal assets.
Glencore has suggested it is open to improving its offer, which represented a 20 per cent premium for the Teck shares when it was first proposed, but has also said it cannot pursue its bid if Teck's plan to separate its businesses goes ahead since it would add significant complexity to the deal.
Teck, which has rejected the Glencore proposal, is controlled by the Keevil family, which owns the company's multi-voting class A shares together with Sumitomo.
Sumitomo holds 18.9 per cent of Teck's class A shares and 0.1 per cent of its class B shares. It also holds a 49 per cent interest in Temagami Mining Co. Ltd., which holds 55 per cent of Teckʼs class A shares.
Teck shareholders will vote on the separation plan at a meeting on April 26.
The company announced in February a proposal to split up its metal and steelmaking coal businesses into two companies, Teck Metals and Elk Valley Resources. The change requires approval by a two-thirds majority vote by the class A shareholders as well as approval by a two-thirds majority vote by the class B shareholders.
Glencore has noted that proxy advisory firms ISS and Glass Lewis have recommended shareholders vote against the separation plan, however other Teck shareholders in addition to Sumitomo have said they will support the proposal, including mining industry veteran Ross Beaty,
Teck chief executive Jonathan Price has said the Glencore proposal is not a realistic or viable option and has urged shareholders to support the company's plan.
Price called the Glencore offer is a slightly modified version of a proposal the company made for Teck in 2020 that was rejected because it was not in the best interest of shareholders.
Teck chairman emeritus Norman Keevil has said Glencore's proposal is the wrong one, at the wrong time, but that he is open to talking about other possible deals once the company completes its own plan to split its business.
Keevil has said he would support a transaction — whether it be an operating partnership, merger, acquisition or sale — with the right partner, on the right terms for Teck Metals after the separation takes place.
This report by The Canadian Press was first published April, 20, 2023.
Companies in this story: (TSX:TECK.B)
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