Anglo American chief executive officer Duncan Wanblad acknowledged he and his team had early discussions about the deal with 'a number of stakeholders,' including the governments of South Africa, U.K. and Canada.Jennifer Roberts/The Globe and Mail
Mere hours after Vancouver-based Teck Resources Ltd. TECK-B-T announced its takeover by Anglo American PLC NGLOY in early September, B.C. Premier David Eby made it clear where he stood on the US$20-billion critical minerals deal: He was all-in.
To win over Canadians, London-based Anglo American had announced it would relocate its global headquarters to Vancouver and run the combined company from the West Coast – but remain incorporated in the United Kingdom – and Mr. Eby loved it. “What a remarkable vote of confidence in the people and resources of B.C., and our province’s role as the engine of the new Canadian economy,” he said in a statement.
A day later, Vancouver Mayor Ken Sim shared his own support, and the United Steelworkers union, which has 2,500 members at Teck’s copper mine and smelting operations in British Columbia, also expressed “cautious optimism.”
At this point, there had barely been time to mentally digest the consequential takeover – or as the two companies call it, a “merger of equals” – let alone make a call on it, but support from three significant stakeholders suggested there were at least some advance notices. Then came the revelation, reported in The Globe and Mail, that Ottawa was brought into the tent early, and Prime Minister Mark Carney was keen on Anglo American moving its headquarters to Canada.
In one respect, early negotiations are just smart business. In 2024, Anglo fended off a takeover bid from BHP Group Ltd. by leaning into nationalist fervour in South Africa, where it has roots, and it was possible a similar uproar could happen in Canada over Teck.
Yet the level of stagecraft also shows just how much has changed when it comes to takeovers of national champions in crucial industries. When Canada’s mining sector was hollowed out by foreign buyers 20 years ago, losing control of nickel producers Inco Ltd. and Falconbridge Inc., and aluminium giant Alcan Inc., successive Liberal and Conservative minority governments in Ottawa barely said a peep to protect the Canadian companies.
It is the complete opposite today. And because government now holds so many cards, different types of advice have taken priority. It used to be that investment bankers were gods because they knew how to find synergies and calculate appropriate takeover premiums. The new age power players are lawyers who know the ins and outs of the Investment Canada Act, and government relations and communications professionals who appreciate what politicians need to score points with voters.
In an interview with The Globe on Thursday, Anglo American chief executive officer Duncan Wanblad played coy about all his backroom dealings, but acknowledged he and his team had spoken early “to a number of stakeholders, including the governments of South Africa, U.K. and Canada, and a number of consultancies that gave us advice has to how things work and what we should be thinking about.”
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The seeds of this shift were planted in 2010 when BHP – then BHP Billiton – launched a $39-billion hostile takeover bid for Potash Corp. of Saskatchewan. At the time, Ottawa had never blocked a foreign takeover of a Canadian resource company, and the odds seemed to be in BHP’s favour. But three months in, BHP and its then CEO, Marius Kloppers, were sent packing after their takeover proposal was ripped up in Ottawa – by a Conservative government, no less.
BHP is held up as a textbook case of what not to do because it got many things wrong. After launching his bid, Mr. Kloppers came across as dismissive to government officials, and BHP was looking to dismantle Canpotex, a marketing cartel that helped keep potash prices high, boosting government royalties in Saskatchewan. More than anything, the company underestimated then Saskatchewan premier Brad Wall, who launched a fiery call for Ottawa’s intervention. “I don’t think BHP spent 10 minutes looking at the local politics,” Pierre Lassonde, co-founder of Franco-Nevada Corp., told The Globe at the time.
Under pressure from a conservative premier to block the deal, then prime minister Stephen Harper and his industry minister, Tony Clement, conducted a review under the Investment Canada Act and decided the takeover was not likely to be of “net benefit” to Canada. No specifics were ever given.
Two years later, the federal government had to intervene again, after China’s state-controlled CNOOC Ltd. launched a $15.1-billion bid for Calgary-based oil producer Nexen Inc. and Malaysia’s Petronas bid $6-billion for Calgary-based natural gas producer Progress Energy Resources Corp. This time around, Ottawa compromised: Both deals could proceed, but in the future, the oil sands would be considered a strategic resource and producers there couldn’t be bought up by foreign state-owned entities.
For the next decade, there was an implicit understanding among deal advisers on foreign takeovers: Offer some concessions up front and spell out how the deal would be a “net benefit” to Canada, even if it wasn’t a critically important sector. In 2016, for instance, Vail Resorts Inc. bought Whistler Blackcomb Holdings Inc. and the buyer laid out its promises in the deal’s news release, including “substantially” investing in Whistler’s mountain infrastructure, keeping “principally local Canadian leadership” at the resort and retaining “the vast majority of Whistler Blackcomb employees.”
Lately these norms have changed, and some of it can be pinned on Donald Trump’s second term as U.S. President. He has shown a preference for a form of state capitalism. Earlier this year, Japan’s Nippon Steel Corp. was given approval to buy U.S. Steel Corp., but only if it agreed to a national security agreement that gave the U.S. government the authority to name a board member as well as a golden share that gives the U.S government veto authority over corporate decisions, such as relocating the U.S. headquarters.
But lately Canada has also given Ottawa more power in foreign investment reviews by emphasizing the importance of economic security as a national security consideration, and by spelling out that critical minerals miners could only be purchased “in the most exceptional of circumstances.”
In other words, it would be impossible for a foreign buyer to have Ottawa even hear the purchaser out unless a flawless case was made.
That is especially true for Teck, because the new foreign investment review guidelines were designed to protect natural resources companies specifically, and Teck had leaned on Ottawa to fight off a hostile bid from Glencore PLC in 2023.
To make their case now, Anglo, Teck and their advisers are taking all the lessons from the past 15 years and wrapping them into a single deal. The B.C. Premier? He can’t turn on them because he’s supported the combination from day one. The union? It can’t raise a fuss because it’s already on board. They even got the Prime Minister to spell out what could make him comfortable with the deal.
It still might not be an enough. When it comes to foreign takeovers, strange things can happen. A made-in-Canada solution could appear, or maybe shareholders will try to wrest back control and demand more money. But at the very least, the rollout so far has been a master class in stage management.