The tug-of-war between Glencore and Teck | Canada News Media
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The tug-of-war between Glencore and Teck

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In FEBRUARY TECK RESOUrCES finally announced its slow move into the future. The Canadian miner plans to spin off its relatively dirty steelmaking-coal operations. Under the plan, Teck would focus on mining copper and zinc, while continuing to get the majority of the severed coal company’s profits. Holders of Teck’s super-voting “class A” shares would retain control over the rump firm’s strategic moves for six years. After that its dual-shareholding structure would be scrapped.

Glencore, a much bigger commodity firm based in Switzerland, has something much more radical in mind. It proposes a merger between it and Teck that would then create two giant versions of Teck’s proposed entities. The first would amalgamate Glencore’s and Teck’s metals and minerals businesses. It would be listed in London and have an enterprise value of perhaps $100bn. With copper mining expected to make up roughly half its profits, “GlenTeck” would be a red-metal giant poised to take advantage of a green commodities supercycle. The second company would combine the parent firms’ coal businesses, to be listed in New York. This “CoalCo” would shovel all cash it generates to shareholders as the world weans itself off the black stuff.

Glencore publicly announced its unsolicited offer on April 3rd. Its boss, Gary Nagle, said that the deal, with an implied premium of 20% over Teck’s share price, would cut costs and unlock shareholder value. After swiftly rejecting the offer, his opposite number at Teck, Jonathan Price, called the transaction a “non-starter”, complaining that it would expose Teck’s shareholders to Glencore’s thermal-coal business, which may command less enthusiasm from investors than coking coal for steel mills. Mr Nagle fired back on April 11th, offering Teck’s shareholders their quarter of CoalCo in cash rather than shares. If later this month shareholders scupper Teck’s original restructuring plan, which requires approval from supermajorities of both share classes, the firm could be forced to the negotiating table.

Even then, securing a merger will be difficult. It would be the biggest acquisition of a Canadian miner since 2007. The Keevil family, which owns many of Teck’s super-voting shares, is a hard sell. Norman Keevil, the patriarch and Teck’s chairman emeritus, has made plain his desire to keep the firm in Canadian hands. Canada’s government shares his wariness: it is tightening foreign-investment rules in its critical-minerals sectors.

To placate the Keevils and the Canadian authorities, Glencore promises to keep GlenTeck’s industrial head office in Canada. In addition, it has pledged domestic employment guarantees and a secondary listing on Toronto’s stock exchange.

If Glencore’s overtures to Teck fail despite all these sweeteners, the Swiss company may still want to put its coal business up for sale. Other mining bosses may be ready to start shaking hands, too. On April 10th Newmont, an American mining giant, raised its takeover offer for Newcrest, an Australian gold miner, to almost $20bn. Years of dwindling capital expenditure and a commodities boom have left miners flush with cash. With their shares often trading close to the replacement value of their assets, buying looks more attractive than building.

 

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Roots sees room for expansion in activewear, reports $5.2M Q2 loss and sales drop

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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.

The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.

“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.

The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.

But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.

Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.

“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.

“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”

Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.

The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.

In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.

Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.

The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.

The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.

Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.

Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.

It will also re-evaluate its design ranks.

Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.

Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:ROOT)

The Canadian Press. All rights reserved.

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Talks on today over HandyDART strike affecting vulnerable people in Metro Vancouver

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VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.

No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.

About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.

Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.

Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.

A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”

This report by The Canadian Press was first published Sept. 12, 2024.

The Canadian Press. All rights reserved.

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Transat AT reports $39.9M Q3 loss compared with $57.3M profit a year earlier

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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.

The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.

The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.

Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.

On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.

Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:TRZ)

The Canadian Press. All rights reserved.

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