Anglo American and Teck announce zero-premium merger to create copper-focused major, says Wood Mackenzie

Following the announced merger between Anglo American and Teck to form Anglo Teck, James Whiteside, Research Director at Wood Mackenzie, said: “The merger accelerates Anglo American's strategy to focus on prioritising scale and high margin commodities and offers a geographically diversified pipeline of copper growth projects with strong returns. For Teck, the deal provides the highest copper exposure and least dilution among potential suitors while preserving strategic influence through enhanced board representation.”    

The deal will result in 62.4% ownership for Anglo American shareholders and 37.6% for Teck shareholders, with Anglo American declaring a US$4.5 billion special dividend to optimise the opening balance sheet.    

The combined entity will benefit from Teck's robust operational assets, including QB2 in Chile (60%). Other key assets include Highland Valley Copper in Canada (90%) and Antamina in Peru (22.5%), one of the lowest-cost copper-zinc mines globally.    

Teck's project pipeline includes high-return developments such as San Nicolas in Mexico (50%) and Zafranal in Peru (80%). Deeper pipeline options include Galore Creek in Canada and Nueva Union in Chile. The company has formed joint venture agreements across all copper projects, reducing single-project exposure.    

Wood Mackenzie's post-tax sum-of-the-parts net asset value for Teck stands at US$10.8 billion. This comprises US$13.8 billion from copper and US$1.1 billion from zinc, offset by US$4.1 billion in central costs.    

Equity attributable copper production by company (Kt Cu, 2024)  

Source: Wood Mackenzie

Anglo American’s cost discipline strengthens the strategic case - the group achieved US$1.3 billion in annual savings in 2024, and has identified US$0.8 billion in corporate synergies here. But the real upside lies in re-rating. Management expects that increased copper exposure, a streamlined portfolio, and strong growth potential will drive a higher valuation multiple. If Anglo Teck positions itself as a pure-play copper growth story, the re-rating could far exceed synergy gains.    

“Regulatory scrutiny under Canada's Investment Canada Act represents the most material risk, with the Minister of Industry required to confirm alignment with national economic and security interests,” said Whiteside.