Anglo American and Teck Resources have announced a stock-for-stock merger valued at approximately £53 billion, poised to create a global leader in critical minerals, particularly copper. The deal, which establishes a new entity named Anglo Teck, aims to capitalize on the growing demand for metals essential to the energy transition, though some analysts suggest Teck Resources' stock may be undervalued in the transaction.

Anglo American and Teck Resources Announce Combination to Form Critical Minerals Powerhouse

London-listed Anglo American and Canada's Teck Resources have officially announced a stock-for-stock merger, an agreement valued at approximately £53 billion. The transaction is set to create a new global mining entity, Anglo Teck, positioning it as a significant player in the critical minerals sector, with a strong emphasis on copper production.

Transaction Details and Strategic Intent

The proposed merger, announced on Tuesday, September 9, 2025, is structured as an all-share deal, with Anglo American shareholders set to own approximately 62.4% of the combined company, and Teck Resources shareholders holding 37.6%. Under the terms, Teck shareholders will receive 1.33 Anglo American ordinary shares for each Teck share they hold. Prior to the completion of the merger, Anglo American shareholders are slated to receive a special dividend of $4.5 billion, equivalent to roughly $4.19 per share.

The combined entity, Anglo Teck, will be headquartered in Vancouver, Canada, underscoring a commitment to maintaining a strong operational presence in key mining regions. It will maintain a primary listing on the London Stock Exchange, with secondary listings planned for Toronto, South Africa, and New York. The transaction is anticipated to close within 12 to 18 months, pending customary regulatory approvals across multiple jurisdictions.

Leading the new company will be Duncan Wanblad, current CEO of Anglo American, as CEO, with Jonathan Price, current CEO of Teck, serving as deputy CEO. This leadership structure aims to provide continuity and integrate expertise from both organizations.

Market Reaction and Strategic Rationale

Following the announcement, both companies experienced positive market reactions. Anglo American shares advanced by more than 9%, while Teck Resources stock climbed 14%. Analysts have largely viewed the merger favorably, with UBS reiterating a 'Buy' recommendation for Anglo American and Jefferies increasing its target price.

The core rationale behind this consolidation is the creation of a global critical minerals champion, particularly focused on copper. The combined entity is projected to become the world's fifth-largest copper producer, with copper accounting for over 70% of its earnings by 2027. This strategic alignment aims to capitalize on the anticipated surge in demand for copper, driven by global electrification trends, the proliferation of electric vehicles, and the expanding infrastructure for artificial intelligence.

The merger is also expected to yield significant operational efficiencies and cost savings, with projections of $800 million in pre-tax recurring annual synergies within four years of completion. Furthermore, integrating adjacent Chilean mines, such as Quebrada Blanca and Collahuasi, is anticipated to deliver additional operational benefits, potentially increasing attributable copper volumes to about 1 million metric tons from 2027.

Broader Implications and Valuation Perspectives

This deal represents the largest mining sector merger and acquisition (M&A) in over a decade, signaling a potential wave of broader industry consolidation. The creation of Anglo Teck will enhance portfolio diversification across copper, iron ore, and zinc, strengthening its competitive position against industry giants like BHP, Rio Tinto, and Glencore.

Despite the positive market reception and strategic rationale, some analysts have raised concerns regarding the valuation for Teck Resources shareholders. While the deal is positioned as a "merger of equals," analysis from Morningstar suggests it is "slightly value-accretive to Anglo American and moderately value-destructive to Teck," implying that Anglo American is using its potentially overvalued shares to acquire Teck. The inclusion of a $4.5 billion special dividend for Anglo American shareholders, without a built-in premium for Teck shareholders, effectively reduces any premium for Teck to approximately 1%.

Indeed, Jefferies previously noted that Teck shares were "deeply undervalued" on a standalone basis, with an analyst's fair value estimate for Teck in the low-to-high $40s, suggesting that the current deal terms may not fully reflect the company's high-quality copper assets and long-term production growth potential. This valuation disparity has fueled speculation about potential rival bids from other major mining companies.

The Road Ahead

The merger is contingent on regulatory approvals, a process that is expected to introduce complexities given the size and global reach of the companies involved. The 12 to 18-month timeline for completion allows for thorough regulatory review across multiple jurisdictions. Investors will closely monitor developments, particularly any potential for competing offers for Teck Resources that could emerge given the perceived undervaluation in the current agreement. The formation of Anglo Teck is set to reshape the competitive landscape of the mining industry, especially within the critical minerals space, as the world continues its transition towards a more electrified and technologically advanced future.