Glencore's Strategic Play: A Proposal to Acquire Teck Resources' Steelmaking Coal Business

Glencore plc GLNCY has submitted a proposal to the Board of Directors of Teck Resources Limited TECK offering to acquire Teck's steelmaking coal business for cash.

Glencore submitted this alternative proposal to buy EVR because it is envisaged to enable a value-accretive demerger of the combined coal and carbon steel materials business ("CoalCo") to its shareholders. 

For Glencore, the deal would present a way to exit the hugely profitable but polluting thermal coal business by combining it in a new company with Teck's steelmaking coal operations, stated Bloomberg.

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Glencore stated that it would spin off its own thermal coal operations, along with Teck's steelmaking coal mines, in 12 to 24 months, after reducing the company's net debt by half to roughly $5 billion, alongside a continued commitment to minimum strong BBB/Baa ratings.

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Teck stated that while it is in talks with Glencore, no deal is guaranteed. The Canadian miner also said it is in discussions with other stakeholders, per the report.

Price Action: TECK shares are trading lower by 1.60% at $41.93 on the last check Monday.