Canadian metals company Teck Resources on Monday announced that it had received an “unsolicited and opportunistic” takeover offer from commodities trader Glencore and said that it had rejected the $22.5-billion proposal from the Swiss multinational group.

The proposal contemplates an all-share acquisition of Teck by Glencore offering 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck Class A common share, which represented a 20% premium for both on the date of the offer.

Glencore plans to acquire Teck and subsequently separating into two businesses - MetalsCo and CoalCo.

Teck itself is also planning a separation of the group and announced earlier that it would split into Teck Metals Corp and Elk Valley Resources (EVR). Teck chairperson Sheila Murray said the board believed the planned separation of Teck created a greater spectrum of opportunities for shareholders and was a more compelling transaction than the proposed Glencore deal.

“The Glencore proposal would expose Teck shareholders to a large thermal coal business, an oil trading business and significant jurisdictional risk, all of which would negatively impact the value potential of Teck’s business, is contrary to our ESG commitments and would transfer significant value to Glencore at the expense of Teck shareholders,” said Teck CEO Jonathan Price.

“The board is not contemplating a sale of the company at this time,” added Murray.

Glencore said in a statement in that the proposed merger demerger was compelling and would create significant value for both sets of shareholders.

"The proposed merger demerger would create two standalone companies with substantially larger and more diversified portfolios of assets than those of the proposed standalone Teck Metals and EVR," the company said.

Glencore stated that MetalsCo would be a global base metals company with a Tier 1 portfolio of copper assets, an unrivalled suite of copper growth opportunities, as well as being a leading supplier of cobalt, zinc and nickel. In 2022, MetalsCo would have generated about $16-billion of proforma earnings before interest, tax, depreciation and amortisation (Ebtida).

It added that CoalCo would be a "highly cash-generative, diversified coal producer that would be able to sustain an attractive cash flow payout to investors through the cycle". In 2022, CoalCo would have generated about $26-billion of proforma Ebtida.

"Unlike the proposed Teck separation, the proposed merger demerger would not require any intercompany financial arrangements between the metals and coal businesses going forward; shareholders of CoalCo would participate in the business' cash flow generation immediately upon close.

"Each of MetalsCo and CoalCo would be uniquely positioned within their respective peer groups from an asset quality, scale and diversification perspective, to provide their shareholders with highly liquid exposure to Tier 1 assets and, in the case of MetalsCo, a leading growth pipeline. Glencore and Teck shareholders would be well positioned to participate in a valuation re-rating over time," Glencore stated.

Glencore stressed that it committed to supporting the goals of the Paris Agreement and that it intended to respect the netzero climate strategy Teck had announced in respect of its steelmaking coal operations.   

In addition, CoalCo would oversee a responsible decline of its thermal coal portfolio production in line with Glencore's current ambition to achieve netzero by 2050, with a supportive policy environment. CoalCo would also continue to uphold Glencore's commitment to responsible operating practices.

Glencore further committed that either Teck's Vancouver or Glencore's Toronto office would be MetalsCo's global industrial head office. Both MetalsCo and CoalCo would maintain listings on the TSX.