It was just a week ago when Teck Resources (NYSE:TECK) managed to impress its shareholders sufficiently to push shares up 18% by turning down an offer from Glencore (OTC:GLCNF). Now, Teck gained once more in Tuesday’s trading after Glencore moved to sweeten the offer.
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Interestingly, analysts expected this particular sweetening to take place. Jefferies analyst Christopher LaFemina noted that a “cash kicker” would ultimately be called for to get Teck’s interest. Now, that’s just what’s happened. Glencore ultimately proposed adding a cash element to its earlier offer, which was all-stock. The latest proposal now calls for Teck shareholders to land not only 24% of the company that would arise from the deal but also split an $8.2 billion pot of cash.
The move would actually go a long way toward fixing one of the deal’s primary problems: issues with Teck’s Environmental, Social, and Governance (ESG) policies. The cash payment would keep Teck out of Glencore’s thermal coal business. That was a major cause of Teck’s initial rejection of Glencore’s offer. But while Teck brass called the original Glencore offer a “non-starter,” there’s less word on what they think of the revised offer.
Regardless, it’s clear that analysts are all in on buying TECK stock as it’s considered a Strong Buy by analyst consensus, with 14 Buy recommendations against just four Holds. In addition, its average share price target of $46.79 gives it 8.15% upside potential.