The federal government in Ottawa has approved European mining giant Glencore's (GLEN) $6.93 billion U.S. purchase of Canadian miner Teck Resources' (TECK) steelmaking coal unit.
The approval comes with some conditions attached that are aimed at preserving jobs in the near-term.
Specifically, Glencore has agreed to maintain a Canadian headquarters for at least 10 years and keep current employment levels at the coal unit based in British Columbia for five years.
Following the approval by Canada’s Industry Minister, the acquisition is expected to close by July 11 of this year.
Last November, a Glencore-led consortium offered to acquire Teck Resources steelmaking coal unit for a total of $9 billion U.S.
Under terms of the deal, Swiss-based miner Glencore will get 77% of the business for $6.9 billion U.S. in cash, while 20% will go to Japan's Nippon Steel (TYO: 5401) and the remainder to South Korea's POSCO (PKX).
Teck Resources said it plans to use proceeds from the deal to buyback up to $2.75 billion of its Class B stock and reduce its debt by $2 billion, as well as fund its copper mining operations.
The stock of Teck Resources has risen 28% over the last 12 months and currently trades at $68.95 per share.
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