By Ketki Saxena
Investing.com -- Letko Brosseau & Associates Inc., a Montreal-based investment manager, has declared its support for Teck Resources (TSX:TECKa) Ltd.'s plan to divide the company into two parts instead of accepting Glencore (LON:GLEN) Plc's unsolicited offer. According to Peter Letko, co-founder of the firm, splitting the company will ultimately provide more value for shareholders than selling it off.
In an interview on Thursday, Letko stated that Glencore's bid undervalues Teck’s metallurgical coal assets and called their revised proposal offering $8.2 billion in cash "extremely low."
“I think ultimately this is going to be worth maybe twice what they’re offering,” he said. “I don’t think that we’re in the ballpark. I doubt very much that we’d see a big improvement in their proposal.”
The firm has been a shareholder of Vancouver-based miner Teck for over 20 years and presently holds around 3.6 million shares.
According to Letko, Norman Keevil – who controls the majority stake in Teck – would approve a deal with “the right partner” after separating the metals business from coal operations. Shareholders are set to vote on this plan at an April 26 meeting.
Letko also predicts a surge in interest and bidding bfor Teck Assets following the sell-off - although interest appears already quite high, with 6 miners expressing interest in taking over Teck
“Given a little time, you’ll see broader interest and a real competitive bidding for these assets,” Letko said. “And that’s the way I think we’re going to get the best price.”