Glencore

Glencore, the global resources giant with a market cap of $62 billion and revenue of $60.77 billion as of December 2002, is in the process of attempting to merge with Teck Resources, a large Canadian resource corporation.
Teck has rejected Glencore’s offer to buy the company for approximately $23 billion and to spin off the combined coal assets, and to combine the base metal assets into a separate listed entity. Glencore has since sweetened the deal, offering $8.2 billion in cash.
Many of the large resource players, such as Anglo American and BHP Billiton, have demerged or sold their coal assets to investors who are not averse to the outsized dividends offered in these assets, in addition to the benefits of capital appreciation arising from the corporate actions.
The remaining assets would become the largest base metals operations in the world, with a focus on green-renewable metals such as copper and nickel.
The renewable energy theme, with the re-emergence of China as a large-scale participant in the resource market, should be positive for future deal flow.
The new proposed Glencore deal outcome should gather momentum late in April if the Swiss commodities giant can persuade sufficient Teck investors to accept the offer, rather than Teck’s own plan of splitting off its coal operations.
I am an investor in Glencore shares, which I believe should reward investors even if the above deal fails to materialize.
By Ron Klipin