$ 70b Anglo -Teck merger faces ottawa review, shareholders respond positively – Moneysense

The companies have presented the deal as a ‘merger of equals’, although Anglo American is worth more than Double Deck, since plans include Sourcing Upper Management and Board representation about the same between the two.

The deal would also see the company’s headquarters of what would be known as Anglo Teck to Vancouver, because proponents want to sell to sell Canada about the benefits of the deal that attract the regulations.

“We think this is a very compelling chance for Canada,” said Teck, CEO Jonathan Price in an interview Tuesday. “We will create the largest headquarters in Vancouver, and it is really unprecedented to see a company of the size of Anglo American moving its global headquarters.”

Price will become deputy CEO of the combined company, while Anglo American Chief Executive Duncan Wagblad and Chief Financial Officer John Heasley would move to Vancouver to keep their role in Anglo Teck. Deck -chairman Sheila Murray will be chairman of Anglo Teck, while board chairs would be divided between the two companies.

Merger is confronted with Ottawa Review under Investment Canada Act

The deal will be subject to assessment by the Investment Canada Act, which can be used to block deals that are not considered in the national interest. The BHP Group of Potashcorp (now Nutrien) was stopped in 2010 after the government discovered that it was not a net benefit. Canadian industry, Melanie Joly, said in a statement that the federal government will tackle different issues because she is considering the merger, including the promise of the combined company to have its senior leadership based in and in Canada.

The deal also includes around $ 4.5 billion in canada spending for five years. It is not clear how much of those expenditure is new, but Price said that the combined company would also open the potential for more development in the country in the future. “As a larger company with a larger balance and much greater financial resilience, we will have the opportunity to invest in some of the larger projects here in Canada, for example, such as Galore Creek, which would be very difficult for a smaller company to handle.”

Anglo Teck would keep his offers at the fairs of London and Johannesburg and also request offers at the stock exchanges of Toronto and New York. The plan is to keep the company in London, which would mean that the S&P/TSX Composite Index Deck would lose its offers because companies have to be included in the country.

By taking up the company in London, both for technical reasons and ensures a wider exposure to capital, but the deal must not take away from the deal, which means moving the company, said Watslag in the interview. “Without a doubt, you know, this will definitely be a Canadian company,” he said.

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Deck -investors left with 37.6% and no takeover premium

There are long-standing concerns about Canadian mine giants that are broken up by larger foreign rivals, including when-xstrata that Falconbridge buys in 2006 and the following year Vale Koop Inco and Rio Tinto buy Alcan.

Deck itself was subject to a proposed takeover of US $ 23 billion by Glencore in 2023, only for the company to ultimately buy the coal activities of Teck for US $ 7.3 billion after a long -term battle. Anglo American is no stranger to be a takeover objective himself, because BHP Group did an offer from US $ 49 billion last year.

Anglo’s proposed deal with deck would see that deck shareholders get 1,3301 Anglo American shares for every class A and class B shares they own. Anglo also plans a dividend of approximately US $ 4.5 billion in its shareholders to help the value of the value compared to Teck, but Anglo shareholders will still have approximately 62.4% of the combined company, while existing deck shareholders will hold 37.6%, fully diluted basis.

The deal comes without a premium for Deck shareholders, and while the company is struggling with operational issues at its huge Quebrada Blanca (QB) project in Chile, but Price said it is still useful for investors. “Deck shareholders receive exposure to what will be one of the largest and highest quality copper-oriented companies in the world.”

Combining the two companies can also mean around US $ 800 million in annual synergies before taxes, plus an important boost for the value at QB because it can be performed in combination with the nearby Collahuasi-mine that Anglo is partly owner.

The problems at QB, which Deck further outlined last week, have put pressure on the company’s share price in the short term, according to national bank analyst Shane Nagle. “At the current prices, shares in a significant reduction in the operational outlook in the short term, which we believe can be punished in view of the quality of the underlying portfolio of Deck.” He said that he is not surprised to see interest in Deck given the challenges, but with the company now in the game there is probably several interested parties who want to pay a premium for the company’s portfolio.

Deck and Anglo shares Rally about merged news

So far, shareholders of both companies seem satisfied with the deal. The Teck shares rose more than 14% in the afternoon trade on the Toronto Stock Exchange, while Anglo American’s rose by more than 8% on the London Exchange. The deal has a break rate of US $ 330 million, while the companies say they expect that the merger will be completed in the next 12 to 18 months pending approvals for legal and shareholders.

A two-thirds majority voice by Deck’s class A and class B shareholders, who vote as individual classes, is required to approve the deal, while the majority voice is needed by the US shareholders of Anglo.