How the hedge funds could feast on any Teck deal – and possibly influence its outcome
and later gave the thumbs down to a revised bid that gave Teck investors the option of taking cash instead of shares in the spun-off coal company.
Glencore covets Teck, and there is some chance it will bump up its offer between now and the vote in an effort to derail the Canadian company’s demerger proposal. If Glencore were to add 10 per cent, its 20-per-cent premium would rise to 30 per cent, which may be enough to convince the B shareholders, who own almost all the equity but few of the votes, to come out against the split.
Then what? Suppose the vote does go against Teck. Presumably, Glencore’s merger offer, or an improved version thereof, would remain in place. At that point, the hedgies might load up on Teck shares to the point that they own 10 per cent or 20 per cent of the company, enough for them to have some say in its future. They might take legal action if the Teck board were to continue to reject Glencore’s offer or any lunge for the company.
They can be a litigious crowd. Mr. Icahn employs legal teams to rough up boards of directors. In one of his recent clashes, he reportedly made US$1-billion by opposing Occidental Petroleum’s purchase of Anadarko Petroleum, which he criticized as outrageously expensive. He built a 10-per-cent stake in Occidental and managed to place two of his appointees on its board. A settlement between the two warring parties helped lift the shares, and Mr. Icahn locked in a hefty profit.
In this sense, the hedgies could emerge as an ally of Glencore by threatening to sue the Teck board for breach of fiduciary duty for failing to entertain Glencore’s offer or any other offer that emerges. Remember, Mr. Keevil has said that heThey could even come out on top if the vote goes in favour of Teck, since Mr.
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