Q: TECK made a big move today, selling their coal business for $9 B (US funds). Wondering what you think of the deal, and more importantly, what do you think of TECK.B as an investment now that it will be divesting the coal business. The stock rose about $3 initially on the news, but then fell back to just below the previous close, so clearly, some people were not impressed with the deal.
5i Research Answer:
Since TECK had discussed some sort of deal for nearly a year now, investors were more or less prepared. It is a 'clean' transaction, and we think will be good for TECK over time. It will go into a new cash position and have significant capital available. As a purer company, it could get a better valuation. The stock is cheap at 9x earnings, and we would be fine owning it or buying it. Note the deal requires govt. approval.