In a significant boost for one of the largest proposed mergers in the mining sector, advisory firm Institutional Shareholder Services Inc. (ISS) is recommending that investors vote in favour of combining Anglo American PLC with Canada's Teck Resources Ltd.
Key Endorsement for Landmark Deal
This endorsement from ISS marks the second major shareholder advisory firm to throw its support behind the deal, following a similar recommendation from Glass, Lewis & Co. just five days prior. The backing from these influential firms is a crucial step forward for the transaction, which aims to create a global mining powerhouse valued at an estimated US$50 billion.
In its report issued on Wednesday, ISS stated that support for the merger is warranted due to the anticipated synergies, strategic benefits, and positive market reaction to the proposed combination.
Path to the Shareholder Vote
The fate of the deal now rests with the investors of both companies. Special meetings are scheduled for December 9, where shareholders will cast their votes. Anglo American's investors will convene in London, while Teck Resources' shareholders will meet in Vancouver.
However, the ISS report did not offer blanket support. The firm indicated it does not back proposed changes to Anglo American's long-term incentive plan that are tied to the transaction's success, noting that such transaction-related remuneration is not considered good market practice in the UK.
Regulatory Hurdles and Canadian Conditions
Even with shareholder approval, the merger is not a done deal. The transaction still requires the green light from regulators in several key countries, including China, the United States, and Canada.
Reports from Bloomberg News last week indicated that the Canadian government is applying pressure on Anglo American to make stronger commitments regarding executive and management jobs at the proposed Vancouver headquarters. This is being positioned as a potential condition for approving the takeover of the Canadian mining company, Teck.
The successful completion of this merger would create a dominant producer of essential metals like copper and zinc, with operations spanning multiple continents, significantly reshaping the global mining landscape.
