Shares of Vancouver-based Teck Resources Ltd. recently traded near a record high of $62, as CEO Jonathan Price championed a proposed $70-billion merger with British mining giant Anglo American. Price described the deal as transformative, highlighting the potential synergy between Teck's Quebrada Blanca and Anglo's Collahuasi copper mines in Chile.
Ottawa Throws a Wrench in the Works
Two weeks after Price's optimistic presentation, Teck's stock price fell approximately 10% to $54 per share. The decline followed statements from Canada's Industry Minister, Mélanie Joly, who indicated that the proposed merger did not sufficiently align with the Carney government's national industrial strategy.
According to leaks to the Globe and Mail and a statement to the Wall Street Journal, Joly's demands include having the merged Anglo-Teck corporation fully headquartered in Canada, presumably Vancouver, and listed on a Canadian stock exchange instead of the London market. This would effectively transform the new entity into an all-Canadian company.
A Clash of Corporate and Political Visions
When the merger was announced in September, the initial plan was to establish a head office in Vancouver. Anglo's CEO, Duncan Wanblad, was to become CEO of the combined entity, with Teck's Jonathan Price as deputy CEO. However, Anglo American would have remained a British company listed in London.
This arrangement appears insufficient for Minister Joly and Prime Minister Mark Carney. Their position seems ambitious, given that Anglo would own 63% of the merged company, compared to Teck's 37% stake. Joly has consistently invoked the Investment Canada Act, emphasizing the need for the deal to provide a "net benefit" to Canada, particularly in strengthening leadership in critical mineral value chains.
The minister's intervention has been criticized as an unwarranted political move into corporate boardrooms, with little justification outside of genuine national security concerns. The situation raises significant questions about how far the federal government is willing to go in reshaping major business deals to fit its policy objectives.
