Anglo-American and Teck – ‘a merger of equals’
Anglo American plc and Teck Resources Limited announce they have reached an agreement to combine the two companies in a merger of equals to form the Anglo Teck group, a global critical minerals champion and top five global copper producer, headquartered in Canada and expected to offer investors more than 70% exposure to copper.
Both Anglo American and Teck believe the Merger will be highly attractive for both companies’ shareholders and stakeholders, enhancing portfolio quality, resilience and strategic positioning. Bringing together the strengths of both companies, Anglo Teck will leverage proven capabilities in technical and operational excellence, sustainability, product marketing and project execution to deliver significant, value-accretive growth through the cycle.
Anglo Teck will hold an industry-leading portfolio of producing operations, including six world-class copper assets, alongside high-quality premium iron ore and zinc businesses. Anglo Teck will be one of the world’s largest copper producers, and will benefit from some of the world’s highest quality copper endowments, with major brownfield and greenfield copper development projects, located in attractive and well-established mining jurisdictions, to further grow the business. Anglo Teck will also retain growth optionality across its wider product portfolio, including in premium iron ore, zinc and crop nutrients.
The Merger is expected to deliver annual pre-tax synergies of approximately US$800 million by the end of the fourth year following completion of the transaction, with approximately 80% expected to be realised on a run rate basis by the end of the second year following completion, driven by economies of scale, operational efficiencies, and commercial and functional excellence. Anglo Teck will also work with key stakeholders and partners in Collahuasi and Quebrada Blanca to optimise the value of these adjacent assets to realise US$1.4 billion (100% basis) of underlying EBITDA2 revenue synergies on an average pre-tax annual basis from 2030-20493, primarily through operational integration and optimisation of Collahuasi and Quebrada Blanca. This will build on Anglo American’s success with similar adjacency partnerships in Brazil and elsewhere in Chile.
Anglo Teck will be a global mining leader with its global headquarters located in Vancouver and corporate offices to support the global group in London and Johannesburg. With key leadership roles based in Canada, including Duncan Wanblad as CEO, Jonathan Price as Deputy CEO, and John Heasley as CFO, with Sheila Murray as Chair, Anglo Teck will play an enhanced role in the Canadian mining ecosystem, while continuing to play a significant role in mining and business leadership in South Africa and the UK, and expects to be strongly positioned to support the critical minerals strategies of these countries and the priorities of local communities and stakeholders. Country offices and marketing hubs will continue to support the operational footprint of the combined business.
Duncan Wanblad, Chief Executive Officer of Anglo American, commented:
“We are unlocking outstanding value both in the near and longer term – forming a global critical minerals champion with the focus, agility, capabilities and culture that have characterised both companies for so long. Having made such significant progress with Anglo American’s portfolio transformation, which has already added substantial value for our shareholders over the past year, now is the optimal time to take this next strategic step to accelerate our growth. We have a unique opportunity to bring together two highly regarded mining companies whose portfolios and capabilities are deeply complementary, while also sharing a common set of values. We are all committed to preserving and building on the proud heritage of both companies, both in Canada, as Anglo Teck’s natural headquarters, and in South Africa where our commitment to investment and national priorities endure. Together, we are propelling Anglo Teck to the forefront of our industry in terms of value accretive growth in responsibly produced critical minerals.”
Jonathan Price, Chief Executive Officer of Teck, commented:
“This merger of two highly complementary portfolios will create a leading global critical minerals champion headquartered in Canada – a top five global copper producer7 with exceptional mining and processing assets located across Canada, the United States, Latin America, and Southern Africa. It is a natural progression of our strategy and portfolio simplification, which created a platform to enable exactly this sort of transformative transaction. Bringing together our world-class copper assets, premium iron ore and zinc operations and an outstanding pipeline of high-quality growth projects provides enormous resiliency and optionality. This transaction will create significant economic opportunity in Canada, while positioning Anglo Teck to deliver sustainable, long-term value for shareholders and all stakeholders.”
The Merger will be implemented by means of a plan of arrangement through which Anglo American will issue 1.3301 ordinary shares (or, in the case of electing eligible Canadian Teck shareholders, 1.3301 Exchangeable Shares (as defined below)) to the existing Teck shareholders in exchange for each outstanding Teck class A common share and class B subordinate voting share6 consistent with a merger of equals at market. Subject to satisfaction of certain conditions, the Anglo American board also intends to declare a special dividend of US$4.5 billion (expected to be approximately US$4.19 per ordinary share) to be paid by Anglo American to its shareholders5 on the Anglo American register of members (the “Anglo American Special Dividend”) ahead of completion of the Merger. The Anglo American Special Dividend creates an efficient opening balance sheet and allows more balanced participation for Anglo American and Teck shareholders in the go-forward business’ value delivery. Immediately following completion of the Merger, Anglo American and Teck shareholders will own approximately 62.4% and 37.6%6 respectively, of Anglo Teck plc. The Anglo American Special Dividend will be subject to adjustment to ensure Anglo American and Teck shareholders receive aligned ordinary course dividends prior to completion of the Merger.
Anglo Teck will benefit from a global capital markets footprint across major centres of mining finance and technical expertise, with expected stock market listings on the LSE (Equity Shares (Commercial Companies)) JSE, TSX and NYSE4 (to be implemented as a listing of American Depositary Receipts), subject to the approval or acceptance of each applicable exchange.
At or prior to completion, Anglo American and Teck will each nominate for appointment 50% of the non-executive directors of the Anglo Teck plc board, with Sheila Murray to serve as Chair of Anglo Teck upon completion. Upon completion, the executive directors of Anglo Teck plc will be Duncan Wanblad as CEO, Jonathan Price as Deputy CEO, and John Heasley as CFO. The CEO, Deputy CEO, and CFO, and a significant majority of the senior executive team will be based in and reside in Canada, with the senior executive team including meaningful representation from South Africa and the UK. Prior to completion, Anglo American will seek shareholder approval to change its legal name to “Anglo Teck plc” from completion of the Merger and, from and after completion of the Merger, Anglo Teck will conduct its business under the “Anglo Teck” trade name.
