Analysts warn Anglo’s Teck move could make it vulnerable to BHP

Investing.com -- Anglo American announced on Tuesday that it will acquire Canadian miner Teck Resources in an all-stock deal that would establish one of the largest copper producers in the world.

Under the terms, Teck shareholders will receive 1.3301 Anglo American shares for each of their own, giving the company a value of about £30.39 ($41.2) per share, or roughly £14.86 billion ($20.17 billion) based on Anglo’s last closing price.

The agreement follows a Bloomberg report earlier in the day that the two companies were in advanced merger discussions.

Anglo American shares soared more than 7% in London trading, while U.S.-listed shares of Teck Resources were up over 11% in the overnight trade. 

Commenting on the deal, Jefferies analyst Christopher LaFemina highlighted the strategic rationale, citing synergies between Teck’s 60%-owned Quebrada Blanca (QB) operations and Anglo’s 44%-owned Collahuasi mine.

However, the analyst warned that the move could expose Anglo to a fresh approach from BHP.

“The Bloomberg story says that "Anglo’s move to bulk up with an acquisition of Teck could make it less vulnerable to another potential takeover bid itself." On that point, we completely disagree,” LaFemina said.

“Rather, we believe an Anglo bid for Teck could open the door for BHP (or another buyer) to move on Anglo once again as Anglo’s share price will likely be under pressure if the company plans on paying a large premium to get a Teck deal to the finish line," he added.

The analyst drew parallels with Phelps Dodge’s attempted takeover of Inco and Falconbridge in 2006, which left it weakened and ultimately acquired by Freeport.

In Jefferies’ view, Anglo could be playing a similar role now, making it an easier target. They estimated a fair price for a BHP offer would be around £30–32 a share.

The broker also lifted its Teck target price to C$74 from C$60, describing it as “the most compelling stock in our coverage” under a takeout scenario.

Other analysts also flagged competitive pressures. Desjardins said the timing of Anglo’s move looked unusual, given Teck’s ongoing ramp-up of its QB project and recent operational review.

Still, they noted that “BHP was pursuing Anglo” as recently as 2024, and suggested a Teck acquisition could be Anglo’s “way to scale up and play defense.”

Separately, Canaccord Genuity analysts pointed out that Anglo has long been seen as a logical partner for Teck, needing copper growth after divesting platinum and moving away from coal and diamonds.

But they also warned of potential interlopers, recalling BHP’s bid for Anglo in 2024 and Glencore’s 2023 offer for all of Teck.