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Investing.com-- Anglo American PLC (LON:AAL) said on Tuesday it will acquire Canadian miner Teck Resources (NYSE:TECK) (TSX:TECKa) in an all-stock transaction that stands to create one of the world’s biggest copper producers.
The companies announced the deal in a joint statement on Tuesday, calling it a "merger of equals."
Shares in Anglo American jumped 3.5% in London as of 07:20 GMT, while Teck Resources’ U.S. shares soared over 14% during the overnight trade.
Anglo will offer 1.3301 ordinary shares for each share in Teck, valuing the firm at roughly 30.39 pounds ($41.2) per share, or 14.86 billion pounds ($20.17 billion), based on Anglo’s last close.
The figure is a 15.4% premium to Teck’s Monday close at C$49.13 ($35.14), according to Investing.com calculations.
The deal comes just hours after Bloomberg reported that the two were in advanced talks over a merger.
The combined firm will be called Anglo Teck, and is expected to see $800 million in pre-tax recurring annual synergies and an additional $1.4 billion boost to annual underlying earnings from the deal.
Anglo will pay a special dividend of $4.5 billion before the completion of the deal. Anglo shareholders will own roughly 62.4% of the merged firm, while Teck shareholders will own about 37.6%.
The joint entity will be primarily listed in the UK and will maintain listings in South Africa, Canada, and the United States.
The deal stands to create one of the largest global copper producers in the world, and comes amid growing confidence that demand for the red metal will be boosted by the global energy transition.
Teck mainly holds copper assets, and following its 2023 exit from coal, was viewed as an attractive acquisition target for bigger miners.
Anglo and Teck said the combined entity will produce roughly 1.2 million tons of copper annually from 2027, with both companies owning mines in Chile, Peru, and Canada. The company will also maintain iron ore and zinc mining operations.
Ango Teck will remain committed to Anglo American ’s ongoing attempts to simplify its portfolio and complete the sale of its De Beers diamond unit.
"Anglo American and Teck have both recently been engaged in substantial portfolio simplification, which makes this the right time to bring the two companies together with a streamlined, new organisational structure," the companies said.
Anglo’s bid for Teck comes amid some attempts at consolidation in the mining industry. Anglo had last year rejected a bid from larger peer BHP Group Ltd (ASX:BHP), as the latter sought to add to its copper portfolio.
(Ambar Warrick contributed to this report.)