Anglo American (LSE:AAL,OTCQX:AAUKF) and Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK) have agreed to merge in a blockbuster US$53 billion deal that will create one of the world’s largest copper producers.
Under the terms of the all-share merger, announced on Tuesday (September 9), Anglo American shareholders will hold 62.4 percent of the combined company, while Teck investors will own 37.6 percent.
The new entity, tentatively named Anglo Teck, will be headquartered in Vancouver and will have its primary listing on the London Stock Exchange, with secondary listings in Johannesburg, New York and Vancouver.
Copper, which is vital for power grids, electric vehicles and increasingly energy-hungry data centers, has become the focus of a global scramble for supply, driving consolidation among major players within the industry.
“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,â€� said Anglo American CEO Duncan Wanblad in the company’s press release. Wanblad will lead the combined group from Canada, while Teck CEO Jonathan Price will serve as the deputy chief executive of Anglo Teck.
Copper is projected to account for more than 70 percent of the merged company’s earnings by 2027.
Both companies have recently fended off prior takeover attempts.
Last year, Anglo American rejected a US$38.8 billion bid from Australian giant BHP (ASX:BHP,NYSE:BHP,LSE:BHP), while Teck turned down a US$22.5 billion offer from Glencore (LSE:GLEN,OTC Pink:GLCNF) in 2023.
Analysts have described the deal as a signal of Anglo American’s shift from takeover target to aggressive consolidator.
“Anglo American has turned from prey to predator,� said Russ Mould, investment director at AJ Bell.
“The deal to buy Teck Resources, if it completes, means Anglo has not only pulled itself out of a hole, but also sends a message to mining peers that it is not a pushover.�
While the merger is structured as a zero-premium deal, Anglo plans to distribute a US$4.5 billion special dividend to shareholders before the completion of the transaction.
The consolidation is expected to generate significant cost savings. Anglo Teck has projected US$800 million in annual savings within four years, with roughly US$60 million targeted from executive and head office rationalization.
While the companies have pledged “no net reduction in the number of employees� in Canada, market watchers anticipate potential job losses at Anglo’s London office as the headquarters shift to Vancouver.
Canadian officials have already commented on the transaction, with Mélanie Joly, minister of innovation, science and industry, saying it will be reviewed to ensure it represents a ‘net benefit’ to Canada.
Investors reacted positively to the announcement. Anglo’s shares climbed more than 10 percent following the news, lifting its market cap to US$39.5 billion, while Teck’s US-listed shares gained over 10.4 percent in pre-market trading.
Beyond copper, London-based Anglo American has been actively restructuring its portfolio.
The company has sold or demerged non-core assets to focus on copper and iron ore, including the demerger of its platinum business in May and the pending sale of its nickel and steelmaking coal operations.
Anglo is also exploring options for its De Beers diamond unit, either through a potential sale or a separate listing.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
