Anglo American stock rises 9% after merger deal with Teck Resources

Investors reacted positively connected Tuesday to nan news that London-listed miner Anglo American will merge pinch Canadian copper shaper Teck Resources.

Shares successful Anglo American roseate much than 9% aft nan companies shared nan announcement earlier successful nan day, confirming earlier media reports.

The merger will create a copper-mining elephantine worthy much than $50 cardinal (€42.6bn), making nan woody nan biggest successful nan mining assemblage successful complete a decade.

Anglo investors will ain 62.4% of nan caller firm, while Teck shareholders will clasp nan remaining 37.6%.

The woody is zero-premium, meaning Teck investors aren’t gaining important other worth supra nan existent marketplace price. 

Anglo will rumor 1.3301 shares for each Teck stock and salary its investors a $4.5bn (€3.8bn) typical dividend. 

Can nan momentum last?

“Combining pinch Teck will springiness Anglo greater standard successful copper, a commodity successful beardown request acknowledgment to its cardinal domiciled successful nan modulation to cleanable energy,” said Russ Mould, finance head astatine AJ Bell.

“The large chartless is whether adding Teck’s assets to nan portfolio is capable to revive Anglo’s stock value beyond nan first jump amid excitement astir nan merger,” he added. “Anglo doesn’t person a cleanable history of deal-making.”

In particular, Anglo has struggled pinch its business De Beers — nan world’s biggest gem miner — arsenic lab-grown stones person accrued proviso and pushed down prices. Anglo took impairments of astir $2.9bn (€2.5bn) connected De Beers past year.

Whether aliases not nan stock assistance is short-lived, nan acquisition does nonstop a connection to markets that Anglo American is not a pushover, notably coming aft nan patient managed to fend disconnected takeover attempts by rival BHP.

Australia’s BHP dropped its lengthy pursuit of Anglo American past twelvemonth complete disagreements astir nan company’s restructuring. BHP wanted to waste disconnected immoderate of Anglo’s South African assets, a connection rejected by Anglo shareholders.

Teck has besides been nan taxable of takeover liking from Glencore, who unsuccessfully sought to bargain nan patient 2 years ago. Glencore did, however, negociate to bargain Teck’s steelmaking ember business for astir $6.9bn (€5.9bn).

Support from nan Keevil family

Concerning nan tie-up betwixt Anglo and Teck, nan boards of some companies person unanimously recommended nan deal.

Even so, nan firms underlined that they still person nan powerfulness to reappraisal “unsolicited acquisition proposals” and terminate nan existent woody should they find a “superior” offer. In this circumstance, a break interest of $330 cardinal (€280.9mn) has been agreed.

The regulatory approvals for nan woody could return betwixt 12 and 18 months, according to Teck’s CEO Jonathan Price. He added that Canada's Keevil family, which owns a mostly of Teck's A-class shares, backed nan deal.

Anglo's main executive, Duncan Wanblad, will stay CEO of nan caller institution — Anglo Teck —, while Teck's Jonathan Price will beryllium lawman CEO.

Speaking to journalists from Vancouver, Wanblad branded nan tie-up arsenic a “true merger of equals”, stressing that nan caller committee will beryllium made up arsenic pinch existing board from nan 2 companies.

The caller patient will beryllium headquartered successful Vancouver but clasp its superior banal listing successful London, pinch secondary listings successful Johannesburg, Toronto and New York.

Anglo expects nan consolidation to make yearly costs savings and ratio gains of $800mn (€681mn) by nan 4th twelvemonth aft completion.