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Anglo American Agrees to Buy Teck in Deal Reshaping Mining · Bloomberg Intelligence

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  Speaker 2: There is a mega deal in the mining industry today.
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  Speaker 2: The UK's Anglo American has agreed to buy Canada's Tech Resources.
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  Speaker 2: This is going to create a more than fifty billion
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  Speaker 2: dollar company and it is one of the biggest mining
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  Speaker 2: deals we've seen in about ten years. And here to
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  Speaker 2: break it down for us, as Richard Burke, Bloomberg Intelligence
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  Speaker 2: Senior analyst, Basic Materials, You've got a busy day here, Richard,
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  Speaker 2: thanks so much for coming and we appreciate it. The
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  Speaker 2: company is presenting this as a zero premium transaction. Just
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  Speaker 2: tell us what that is.
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  Speaker 3: Okay.
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  Speaker 4: So what they've done is it's a merger of equals
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  Speaker 4: and it's kind of interesting even though it's label mergers
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  Speaker 4: equal that American Angle shareholders are gonna end up owning
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  Speaker 4: about two thirds of the company roughly, and Tech has
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  Speaker 4: got shareholders gonna end up owning a third of company
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  Speaker 4: well it's gonna be headquarter in Canada. The board is
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  Speaker 4: gonna be fifty to fifty the city and the management
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  Speaker 4: is gonna be fifty to fifty. So even though it's
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  Speaker 4: kind of you know, no premium, merger equals kind of
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  Speaker 4: you know that the governance issues kind of point to
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  Speaker 4: merger equals and that's really probably structured in order to
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  Speaker 4: get approved by the Investment Act, Canada Investment Act. And
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  Speaker 4: also the Kevil family that owns Tech has two classes
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  Speaker 4: share holders, class Class A and Class B. Class A
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  Speaker 4: is super voting rights. He's owned, he owns the majority
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  Speaker 4: of those shares, so he has to approve this deal.
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  Speaker 4: In the past, he you know, glenn Core when Glencourt
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  Speaker 4: tried to buy them about two years ago, he kind
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  Speaker 4: of veto the deal. So the deal and go through.
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  Speaker 4: So there's kind of a unique structure this deal to
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  Speaker 4: kind of you know, fit it through final approval makes sense.
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  Speaker 5: Okay.
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  Speaker 6: So there's also language in the statement of this so
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  Speaker 6: called merger of equals that would allow both firms to
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  Speaker 6: consider unsolicited proposals and for the deal to end if
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  Speaker 6: there's a better offer. Does that mean they're angling for
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  Speaker 6: some counter offer from someone else?
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  Speaker 4: Well, I think it would be a hard press, I
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  Speaker 4: doubt in order to get it through the Canadian Investment Act,
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  Speaker 4: which you know, coppers now being considered a critical material,
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  Speaker 4: critical mineral. H Canada has said they don't want to
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  Speaker 4: see ay their mining companies go away. So would somebody
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  Speaker 4: come in who can pay that much be wanting or
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  Speaker 4: to PHP or Rio Tinto be wanting to move their
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  Speaker 4: headquarters from where they're at to Canada. I highly doubt it. So,
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  Speaker 4: but I think you have to put that language in
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  Speaker 4: the deal that hey, we're open.
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  Speaker 5: To so it's like boiler plate language.
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  Speaker 4: Plate and also prevent that, you know, get sued by
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  Speaker 4: shareholders that you have to go out and looked at
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  Speaker 4: for all fields.
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  Speaker 3: Right.
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  Speaker 2: Do you think that this deal though, between Anglo American
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  Speaker 2: and Tech is going to be the thing that sort
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  Speaker 2: of ignites more M and A in this industry.
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  Speaker 4: I think, you know, they used to be all saying
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  Speaker 4: I used to cover oil and gas industry years ago
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  Speaker 4: before more focused on those mining there's you used to
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  Speaker 4: be on saying it's cheaper draw on Wall Street and
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  Speaker 4: then drill up in the field. And that seems to
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  Speaker 4: be happening in if you look at how much it
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  Speaker 4: costs to you know, get a new copper deposit up
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  Speaker 4: and running. Also, how many years were permitting and all
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  Speaker 4: the other things that happens. You can see that maybe
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  Speaker 4: you sit down and look at this and say, okay,
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  Speaker 4: maybe cheaper draw out you know mine on Wall Street.
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  Speaker 4: Then go out and make.
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  Speaker 6: The mind okay, before this deal is announced, we've seen it.
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  Speaker 6: Both companies have tried to simplify their businesses. Tech sold
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  Speaker 6: the majority of its coal business to glen Core. Anglo
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  Speaker 6: American exited the platinum business and is trying to sell
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  Speaker 6: its coal mines and wants to get rid of its
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  Speaker 6: de Beer's diamond unit. Is that going to continue that
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  Speaker 6: effort and will it be harder or easier to do
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  Speaker 6: that as part of this giant company.
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  Speaker 7: Well, they're both going to.
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  Speaker 3: Angle.
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  Speaker 4: Is going to continue to try to sell coal business
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  Speaker 4: and sell the beers. They think they're going to get
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  Speaker 4: it done before the deal closed. The deal is supposed
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  Speaker 4: to close full eighteen months. They said, those are you know,
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  Speaker 4: and Tech was you know two three years ago. There
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  Speaker 4: was a big push for green companies. Coal is viewed
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  Speaker 4: as very dirty and things like that. Right, we've seen
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  Speaker 4: companies trying to get out of that business to kind
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  Speaker 4: of be shareholders, especially over in Europe, a bigger push
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  Speaker 4: much than in the US. So I still see those
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  Speaker 4: actions continuing.
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  Speaker 2: It's being built as a merger of equals. But I'm
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  Speaker 2: wondering if one party here is getting a better deal
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  Speaker 2: than the other, because if you look at Anglo American,
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  Speaker 2: if this happens for them, they're going to get that
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  Speaker 2: high quality copper asset, right which is really coveted in
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  Speaker 2: the industry. Would you agree that Anglo Americans sort of
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  Speaker 2: has a better end of the bargain here.
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  Speaker 4: Well, the question is Tech has had problems bringing a
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  Speaker 4: new mind on QB, cuber broad Online. And the question
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  Speaker 4: is somebody one of the investors I was talking this morning, goes, well, yes,
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  Speaker 4: if QB gets fixed and everything runs, it looks like
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  Speaker 4: a great deal for Angle. But are you buying a
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  Speaker 4: fixer upper or no? You know, and Tech, honestly, you know,
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  Speaker 4: they've been very good operators in cold business. They've got
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  Speaker 4: act exit a cold business. They haven't been as good
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  Speaker 4: operators in the copper business. So to bring in some expertise,
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  Speaker 4: Angle has a little more expertise in the copper business.
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  Speaker 4: It may help them, you know the value there.
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  Speaker 6: Richard, you mentioned that Canada needs to approve this deal.
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  Speaker 6: I believe the regulators in China and the US need
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  Speaker 6: to as well. Which countries are going to be hardest
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  Speaker 6: to get approval from?
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  Speaker 4: Well, I think it all depends. You know, a year ago,
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  Speaker 4: I would say said Canada. But given that China probably
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  Speaker 4: considers copper critical mineral. Now that me and giving the
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  Speaker 4: how the geopolitics that are going on in the world,
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  Speaker 4: it may be there's going to be everybody taking a
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  Speaker 4: kind of a very measured look at this deal before
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  Speaker 4: it gets approved.
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  Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live
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• 7:03
  Speaker 5: All right, let's go back to the Dell story.
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  Speaker 6: I look at the shares, and the shares are on
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  Speaker 6: a downtrend right now, at least for this morning, down
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  Speaker 6: two and a half percent for one hundred and nineteen dollars. Woojenhoe.
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  Speaker 6: We've been promising that he'd come over and make us
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  Speaker 6: smarter on this. Wujinho is senior technology analyst at Bloombrick Intelligence,
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  Speaker 6: the CFO of Von McGill, stepping down after two years
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  Speaker 6: in the role. What does the share price drop reflect exactly,
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  Speaker 6: wujin Is it fear that a key member of the
• 7:31
  Speaker 6: management team is leaving and others might follow her?
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  Speaker 5: What do you think is going on?
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  Speaker 8: Yeah, hey, hey, scyle, So I think it's it's more
• 7:40
  Speaker 8: along the lines of the timing of her departure. Keep
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  Speaker 8: in mind that these guys reported two weeks ago that
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  Speaker 8: could have been a time where she could have announced
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  Speaker 8: her resignation, and the analyst date is about a month away.
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  Speaker 8: There's another time she could have set the numbers straight
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  Speaker 8: there and then resign there. So it's just a more
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  Speaker 8: of a timing aspect of it than anything else. I
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  Speaker 8: think what brings a little bit of confidence to the
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  Speaker 8: shares is that the company reaffirmed the third quarter guidance
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  Speaker 8: as well as a full year guidance for all intent
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  Speaker 8: and purposes, and that's backed by the COO, Jeff Clark
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  Speaker 8: and the CEO of Michael dell.
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  Speaker 2: Usihon why did Miguil leave? Do we know why? Did
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  Speaker 2: she resign No one.
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  Speaker 8: Knows, you know. On the analyst callback last night, the example,
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  Speaker 8: the reasoning was more along the lines up She's been
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  Speaker 8: at Dell for over thirty years and she went through
• 8:35
  Speaker 8: multiple she took Dell through multiple transitions, and it seemed
• 8:37
  Speaker 8: like a case of burnout. I mean, it's really tough
• 8:40
  Speaker 8: to say what the personal reasonings may be. But we
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  Speaker 8: don't think there's another jobs that she may be going after,
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  Speaker 8: given that she is going to be sticking around for
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  Speaker 8: an interim period. But it may have been more for
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  Speaker 8: personal reasons than anything else.
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  Speaker 6: Okay, so it may have been more for personal reasons
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  Speaker 6: than anything else. Tell us a little bit more about
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  Speaker 6: Della's prospects right now. You mentioned that they read from
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  Speaker 6: their guidance, so that should be something somewhat soothing to investors.
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  Speaker 6: And they had just reported earnings where they beat earning estmates,
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  Speaker 6: yet the stock was down nonetheless, Does that mean that
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  Speaker 6: perhaps there's a little bit of rebalancing here in terms
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  Speaker 6: of expectations for what del can achieve going forward.
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  Speaker 8: Yeah, so let's let's address both. Let me address the
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  Speaker 8: CFO search first. You know, as I noted in my
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  Speaker 8: comments yesterday, my written comments yesterday. Look, they have a
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  Speaker 8: deep bench right and and the person coming in to
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  Speaker 8: take the interim role. You know, I think David Kennedy
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  Speaker 8: he's going to He's the CFO of their Consumer Solutions Group,
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  Speaker 8: which pretty much handles the PC group, so he's just
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  Speaker 8: easily slide right in. As well as Jeff Clark being
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  Speaker 8: a steady hand on the CEO role. He knows the
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  Speaker 8: finances of the company. Well, you know, are they going
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  Speaker 8: to look INTERNALLYI er, accidentally, I don't know. I mean,
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  Speaker 8: I wouldn't be surprised if they just appoint Kennedy as
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  Speaker 8: a CFO, you know, ultimately, but we'll see, we'll see
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  Speaker 8: what happens now. You know, you actually bring a pretty
• 10:07
  Speaker 8: good question, right. The company is evolving. You know, if
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  Speaker 8: we think about the company's business model, AI just came
• 10:15
  Speaker 8: out of nowhere, you know, prior, you know, right after
• 10:19
  Speaker 8: Yvonne uh took the cf C CFO role, and that
• 10:24
  Speaker 8: business is going to be as large as a traditional
• 10:26
  Speaker 8: services ser server business in about in about a year
• 10:29
  Speaker 8: or so. And however, that comes with lower margin. So
• 10:33
  Speaker 8: there is going to be a margin aspect of the
• 10:36
  Speaker 8: business that the new CFO will need to manage going forward.
• 10:39
  Speaker 8: On top of that a pretty I guess, a stable
• 10:44
  Speaker 8: but competitive PC market going forward.
• 10:47
  Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: weekdays at ten a m. Eastern Apple Cocklay and Android
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• 11:09
  Speaker 2: I want to move over now and talk about our
• 11:11
  Speaker 2: big take on Bloomberg today. It's a good one. Puts
• 11:15
  Speaker 2: forth this idea that the Trump administration is going to
• 11:19
  Speaker 2: war with established climate science when you consider mass firings,
• 11:23
  Speaker 2: regulatory rollbacks. There have been funding cuts, ongoing program closures, etc. Etc.
• 11:29
  Speaker 2: Eric Rost and Bloomberg Climate Reporter, one of the authors
• 11:33
  Speaker 2: of this report on the Bloomberg terminal. And Eric, thanks
• 11:35
  Speaker 2: so much for joining us here in the studio. Just
• 11:38
  Speaker 2: sort of break down for us all of these changes happening.
• 11:41
  Speaker 2: How do they actually impact the US's ability to gather
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  Speaker 2: data in this area.
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  Speaker 9: Yeah, I'll start with that last part, right, Whether you
• 11:53
  Speaker 9: are a mayor of a city, or head of an
• 11:56
  Speaker 9: insurance company, or head of an I culture company, everyone
• 12:02
  Speaker 9: throughout the economy public and private sector needs good information
• 12:07
  Speaker 9: to make good decisions, and the US in recent decades
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  Speaker 9: has had the global leadership role in developing the kinds
• 12:17
  Speaker 9: of data that everybody needs in order to see what's coming,
• 12:21
  Speaker 9: to set insurance rates, to understand whether we should build
• 12:25
  Speaker 9: a house here, to understand if this floodplane is going
• 12:28
  Speaker 9: to be a bad place to build houses. And so
• 12:34
  Speaker 9: that's the data we're talking about here, is actionable data
• 12:38
  Speaker 9: that people in the economy have come to rely on
• 12:42
  Speaker 9: to make decisions. To cite one of the many examples
• 12:46
  Speaker 9: we talk about in the story.
• 12:50
  Speaker 7: The US produces it's supposed to be.
• 12:53
  Speaker 9: Not more than every four years national Climate Assessment, which
• 12:57
  Speaker 9: is a huge amount of time and a huge amount
• 13:01
  Speaker 9: of time, and they take, you know, years to develop,
• 13:04
  Speaker 9: hundreds of people to write, and thousands of papers that
• 13:07
  Speaker 9: they're based on. And you see these reports cited in
• 13:12
  Speaker 9: Travelers earning calls and Chipotle earning calls, and reports in Marriott.
• 13:17
  Speaker 9: You know, brands we see every day understand the material
• 13:21
  Speaker 9: and understand the needs of this material. I'm not putting
• 13:23
  Speaker 9: words in their mouth. I'm just pointing out that they
• 13:25
  Speaker 9: say things like this. Those were taken away from public view.
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  Speaker 9: So I think that's an interesting place to start on
• 13:34
  Speaker 9: because like, yeah, the government, like any government, can be
• 13:38
  Speaker 9: cut right and save money, and it's just the nature
• 13:42
  Speaker 9: of bureaucracy. But why are some of the most authoritative
• 13:49
  Speaker 9: and well vetted scientific reports ever written being taken away
• 13:55
  Speaker 9: from public view where they've been for many years?
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  Speaker 6: All good questions. I'm sure that we won't get answers
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  Speaker 6: to them right away either. So what does it mean
• 14:04
  Speaker 6: if you're a company like Travelers and you're relying on
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  Speaker 6: that data?
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  Speaker 5: Do you can you go to private sources for that
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  Speaker 5: kind of information?
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  Speaker 7: Does that exist? It's that's a great question.
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  Speaker 9: Uh, And if we had like another two hours, i'd
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  Speaker 9: love to you know, because we've spent a lot of
• 14:19
  Speaker 9: time uh in the last few years on the private sectors.
• 14:23
  Speaker 9: Uh uh, you know, filling a hole in useful climate
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  Speaker 9: data that that businesses, uh, the businesses needs.
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  Speaker 7: So the short answer is, yes, some.
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  Speaker 9: Of uh this this this data, a lot of it
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  Speaker 9: is like translated into the language of risk for companies.
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  Speaker 7: It does exist.
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  Speaker 9: The bigger concern is, like, that's a tiny fraction of
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  Speaker 9: what we're talking about here, you know, we're talking about
• 14:52
  Speaker 9: you know, very sophisticated uh computer models that like the
• 14:55
  Speaker 9: entire world relies on to make sense of you know,
• 14:59
  Speaker 9: observation we see and weather stations and in you know,
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  Speaker 9: in other sources and a particularly you know, I don't know,
• 15:09
  Speaker 9: I'll get in trouble for saying this, but this could
• 15:11
  Speaker 9: be described as like the most boring kind of data
• 15:15
  Speaker 9: is also some of the most important, and that is
• 15:18
  Speaker 9: unsexy data. Unsexy data. It's like continuous monitoring data. It's
• 15:24
  Speaker 9: you know, it's very important for some kinds of data
• 15:28
  Speaker 9: that you have a complete, unbroken record.
• 15:32
  Speaker 7: The most iconic one in.
• 15:33
  Speaker 9: This space is the CO two measurements from Hawaii and
• 15:38
  Speaker 9: Manta Loa that have been going on since the late
• 15:42
  Speaker 9: nineteen fifties and are largely responsible for the discovery of
• 15:46
  Speaker 9: global warming. Like that data set, one of the most
• 15:50
  Speaker 9: famous data sets ever collected, was slated for closure in
• 15:56
  Speaker 9: the recent White House budget.
• 15:58
  Speaker 5: Stay with us more from Bloomer Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: you get your podcasts or watch us live on YouTube.
• 16:19
  Speaker 2: But I want to talk now about the FED because
• 16:22
  Speaker 2: that's what we keep doing here as we lead up
• 16:23
  Speaker 2: to next week's meeting and Wall Street's betting on the
• 16:26
  Speaker 2: FED handing us our first interest rate cut of the year.
• 16:29
  Speaker 2: How large of a cut is still up for debate.
• 16:30
  Speaker 2: But what's it going to mean for banks, especially those
• 16:33
  Speaker 2: regional banks. Well, who better to talk about it than
• 16:35
  Speaker 2: John Buren is CEO of Flushing Financial and he joins
• 16:39
  Speaker 2: us here now in our studios. John, good to see.
• 16:41
  Speaker 3: You, Great to be here.
• 16:43
  Speaker 2: I'm just curious because I know that smaller banks can
• 16:46
  Speaker 2: usually be more nimble when there's policy change. What are
• 16:49
  Speaker 2: you looking for from the FED next week and how
• 16:51
  Speaker 2: are you positioning your bank to take advantage of whatever
• 16:54
  Speaker 2: it is they do.
• 16:55
  Speaker 3: Well, we're in a great position. If the FED cuts rates,
• 16:59
  Speaker 3: our funding call us go down and demand starts to
• 17:03
  Speaker 3: pick up. So we've been dealing with for about two
• 17:06
  Speaker 3: years with a pretty much a inverted yield curve, and
• 17:10
  Speaker 3: that is not the best place for banks to be.
• 17:14
  Speaker 3: So banks tend to, particularly community banks, tend to borrow
• 17:17
  Speaker 3: a little bit on the short side and lend a
• 17:20
  Speaker 3: little bit more on the long side of the yield curve,
• 17:23
  Speaker 3: So having a more positively sloped yield curve would be
• 17:26
  Speaker 3: very very helpful. So if the FED reduces rates, that
• 17:29
  Speaker 3: reduces the shorter end of the yield curve. So we're
• 17:34
  Speaker 3: hopeful to see more than one, but we've got high
• 17:37
  Speaker 3: expectations for the one in September for sure.
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  Speaker 7: And is it an impact for us?
• 17:42
  Speaker 6: As Alexis mentioned, this will be the first rate cut
• 17:44
  Speaker 6: of the year, so there's been a lot of anticipation
• 17:47
  Speaker 6: that bar and costs will come down. What kind of
• 17:49
  Speaker 6: preparations have your customers, your clients made for this rate cut?
• 17:53
  Speaker 6: I mean, are they ready to go when that rate
• 17:55
  Speaker 6: cut comes through?
• 17:56
  Speaker 9: Oh?
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  Speaker 3: I think they've been ready for a while. They've been
• 17:58
  Speaker 3: holding back on investments clearly. So we've seen over the
• 18:01
  Speaker 3: course of these past couple of years really very very
• 18:07
  Speaker 3: low rate of investment, a very very low rate of
• 18:12
  Speaker 3: companies building more planted going into longer term investments. The
• 18:17
  Speaker 3: commercial real estate market is very, very very slow at
• 18:22
  Speaker 3: this point in time, so we have an expectation that
• 18:25
  Speaker 3: if those rates start to come down, that that will
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  Speaker 3: generate a significant amount of business.
• 18:30
  Speaker 2: A lot of your business does come from the small
• 18:33
  Speaker 2: business and commercial side, right versus individual or residential. But
• 18:36
  Speaker 2: I'm wondering if those two markets are sort of in
• 18:38
  Speaker 2: lockstep with each other. Have they been?
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  Speaker 3: Oh, they clearly are. I think, you know, I think
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  Speaker 3: a reduction in rates will help housing costs as well
• 18:48
  Speaker 3: and possibly spark another round of refinance activity, which is
• 18:54
  Speaker 3: always very important in the real estate market.
• 18:57
  Speaker 6: You're very much exposed to multi family house lending, two
• 19:01
  Speaker 6: companies that are invested in that space. What can you
• 19:05
  Speaker 6: tell us about where things stand right now, because there's
• 19:07
  Speaker 6: an affordability crisis not just in New York but across
• 19:10
  Speaker 6: the nation, and I'm wondering how that plays out on
• 19:14
  Speaker 6: your customers and what that means for their demand for loans.
• 19:18
  Speaker 3: So the the multi family market has been pretty pretty
• 19:23
  Speaker 3: calm over the past couple of a couple of years,
• 19:25
  Speaker 3: between the raid environment and also the situation with respect
• 19:30
  Speaker 3: to you know, concerns about multi family in general. So
• 19:36
  Speaker 3: where we're at right now is that the that the
• 19:39
  Speaker 3: market is such that a reduction in rates will clearly
• 19:44
  Speaker 3: spark some refi activity, clearly spark some more investment in
• 19:48
  Speaker 3: the in the market. Now we're dealing also with concern
• 19:52
  Speaker 3: and concerns about the UH, the environment with respect to
• 19:56
  Speaker 3: the UH mayoral mayoral election, possible freeze on rates. But
• 20:01
  Speaker 3: when you look at it from a banking perspective, most
• 20:03
  Speaker 3: of the difficulties in this market have been non banks,
• 20:07
  Speaker 3: and banks that have done well in terms of their
• 20:10
  Speaker 3: UH stress testing their loans initially watching their capitalization rates
• 20:17
  Speaker 3: are really really in good shape. We have not seen
• 20:19
  Speaker 3: that predicted disaster that was going to take take place
• 20:22
  Speaker 3: in commercial real estate, and reduction and rates will just
• 20:26
  Speaker 3: help help to move us in a positive direction.
• 20:29
  Speaker 2: What is the regulatory landscape like for the for the
• 20:32
  Speaker 2: regional banks right now?
• 20:33
  Speaker 7: It has?
• 20:33
  Speaker 2: Has it been a friendly one for you over the
• 20:35
  Speaker 2: past few months.
• 20:36
  Speaker 3: It clearly is showing signs of improving. You know, for example,
• 20:41
  Speaker 3: h M and A activity is moving along very very quickly,
• 20:45
  Speaker 3: much more quickly than under the under the prior administration.
• 20:49
  Speaker 3: You know, clearly there's been a lot of discussion about
• 20:53
  Speaker 3: even reducing even increasing the UH. The cap on if
• 20:59
  Speaker 3: the I c averages is certainly out there as a
• 21:02
  Speaker 3: discussion item. So we're starting to see a much more
• 21:05
  Speaker 3: business friendly environment. Not all of it is in place yet,
• 21:10
  Speaker 3: but those pieces when they come together and particularly when
• 21:14
  Speaker 3: you know when the interest rate piece comes together. If
• 21:16
  Speaker 3: we see more than one and we're here in December
• 21:19
  Speaker 3: with reinterest rate cuts, I think that's a real impetus
• 21:24
  Speaker 3: for major, major economic activity.
• 21:27
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