The merger of equals between Teck Resources (NYSE:TECK) and Anglo American (LSE:AAL) is progressing, with Teck outlining the remaining steps before completion. Once all conditions are satisfied, the merger will close after 11 trading days, taking effect at 10:00pm Vancouver time on the 11th day (3:00pm AEST the following day).
A key requirement of the merger is that Anglo American declare a special dividend of around US$4.5 billion ($6.3 billion). While the original agreement required the dividend to be paid within 30 days of the merger’s effective date, Teck and Anglo American have now agreed to extend the payment window to 45 days.
Anglo American shareholders will own 62.4% of the merged company, while Teck investors will hold 37.6%. The merged company’s headquarters will remain in Canada, with a primary London listing and a secondary listing on the Johannesburg stock exchange (JSE).
Part of the merger plans involves integrating Teck’s Quebrada Blanca copper operation in Chile with the Collahuasi mine, which is a joint venture between Anglo American (44%), Glencore (LSE:GLEN) (44%), and a Japanese consortium led by Mitsui & Co (TYO:8031) (12%).
Quebrada Blanca and Collahuasi are close enough to share processing plants, water, and other key infrastructure.
Anglo American CEO Duncan Wanblad has noted that the integration has the potential to add around US$1.4 billion in annual earnings for the partners.
The Financial Times has reported that Glencore is planning to ‘play hardball’ with Anglo American regarding the integration. Talks between the two parties are currently underway, with insider sources noting that Glencore is demanding “a serious price” for the mine and how it will be operated.
As negotiations with Glencore unfold, the outcome will determine whether the partners can unlock the forecast US$1.4 billion uplift or whether hardball tactics delay the promise of shared infrastructure and earnings growth.
Write to Amy Rotman at Mining.com.au
Main image: Anglo American
