Anglo American, the European mining company, has agreed to merge with Canada’s Teck Resources in a deal that’s set to become the second-largest M&A activity in the mining industry.  

Per the proposed deal, Anglo American and Teck’s shareholders would own 62.4% and 37.6%, respectively, of the new company, Anglo Teck, immediately after the completion of the merger. 

Anglo Teck’s global headquarters will be in Vancouver, and its corporate offices will be based in London and Johannesburg, to support the company’s international teams.  

Anglo American and Teck have stated that $800 million of recurring pretax annual income will be gained from both companies following the deal. An additional $1.4 billion of annual synergies could potentially be gained by integrating the two Chilean large-scale copper mines, Collahuasi and Quebrada Blanca operations, Anglo American said. 

As Anglo American and Teck can still be allowed to consider unsolicited acquisition proposals, a $330 million break fee would apply, which both entities would have to pay, under those conditions.  

The merger, subject to customary and regulatory conditions, is expected to be completed within 12-18 months. 

Over the next five years, the combined company, Anglo Teck, plans to make an investment of $4.5 billion in Canada, which will be allocated towards the mine extension of the Highland Valley Copper Mine from 2028 through to 2046, improving critical minerals processing capacity, enhancing the development of new copper mines in Northwestern British Columbia, and expanding minerals exploration, training, research and launching jobs in Canada. 

In part of the proposed merger, Anglo Teck will play a key role in implementing minerals strategies across South Africa and the United Kingdom.  

While this proposal is considered a huge game-changer for the mining industry, Anglo American has previously faced three failed takeovers from BHP Group last year.  

Initially, BHP offered approximately $42.06 billion last April, which was rejected by Anglo’s board. Last May, BHP made a second offer to takeover Anglo for $45 billion and a third attempt to acquire Anglo for $49 billion. 

BHP’s CEO Mike Henry said the proposed buyout of Anglo American would create a “leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal,” which would result in BHP “bringing its track record of operational excellence” following the maximized returns from the assets. 

Meanwhile, Teck rejected a $22.5 billion takeover offer from Glencore in 2023. However, Teck sold its steelmaking coal business to Glencore for roughly $6.93 billion. 

For this merger, Centerview Partners, Morgan Stanley, Goldman Sachs, and RBC Capital Markets served as the financial advisers for Anglo American, and BMO Capital Markets and Ardea Partners LP were financial advisers for Teck, with Scotiabank providing fairness opinions to the board.