By Ketki Saxena
Investing.com -- China Investment Corp., the biggest shareholder of Teck Resources (TSX:TECKa) Ltd., is currently leaning towards Glencore (LON:GLEN) Plc’s takeover plan that would allow investors to exit their coal exposure in return for cash - providing a big boost to Glencore's chances as both companies compete to win investor support for their proposals.
CIC owns 10% of Teck’s Class B shares, which puts them in a powerful position since two-thirds approval from both classes of shares is required.
While Glencore wants to buy Teck and spin off the combined companies’ coal assets, Teck says the deal is “non-starter” and instead plans on spinning off its coal mines and focusing on metals.
Teck shareholders will decide on April 26 whether to support's Teck's spinoff, in a vote that is being framed as a referendum on Glencore's proposal.
CIC favors Glencore's proposal because it would allow for a cleaner exit for investors who want out of coal exposure. However, as per people familiar with the matter, CIC may still seek a higher price from Glencore before supporting its offer.
If investors approve separation then Glencore's current proposal will be dead in the water; however, if they vote against it then there won't be any clear strategy left behind potentially putting pressure on Keevil family (who controls fate through supervoting Class A shares) and board members to engage with Glencore.
Both companies are trying hard to win investor support - Jonathan Price (Teck CEO) and Gary Nagle (Glencore CEO) held investor meetings in Toronto, with Nagle meeting or speaking with more than 100 investors. Glencore also recieved a significant boost when Institutional Shareholder Services advised Teck shareholders to vote against the company's own proposal.