Anglo American shares rose by more than 7% following the merger announcement
Anglo American will own 62.4% of the newly merged Anglo Teck company, while Teck shareholders will own 37.6%.
Anglo Teck headquarters will have In Canada, but the initial stock listing is in London, said two companies with a combined market capitalization of more than 53 billion .
The deal, which makes the new entity the fifth largest copper company in the world, is also Anglo's big bet on the Glencore GLEN merger.
The $90 billion Xstrata deal in 2013 remains the largest mining deal in history.
Copper used in the energy and construction sectors is poised to benefit from the growing demand from the electric vehicle sector and other emerging applications such as data centers for artificial intelligence.
The race to dominate the copper space has fueled a rush to develop new projects, as well as a flurry of takeover bids, although so far none have been successful acquisitions.
Anglo is facing a takeover bid (BHP.
AX worth 39 billion pounds (53 billion), opens a new tab last year, which was eventually rejected by its board of directors. Teck rejected Glencore's $22.5 billion takeover offer in 2023, even though it sold its steel and coal business to Glencore for $6.93 billion.
The transaction has a zero-premium structure, all shares. In fact, as a protection against absorption.
The lack of a premium could open the door to competing offers, but Anglo shareholders will receive a special dividend of 4.5 billion.
"Cutting the damage will be a big question for the market on this deal," Berenberg's analysts wrote in a note, adding that Glencore and BHP, in particular, could still intervene.
While Anglo and Teck may still consider unsolicited acquisition offers, a break fee of $330 million will apply.
Anglo CEO Duncan Vanblad will remain CEO of the new company, while Jonathan Pryce of Teck will serve as deputy CEO.
"We will have a stronger, more sustainable financial platform with the advantages of scale, including greater flexibility for dynamic capital redistribution with the highest return opportunities," he said.
According to Anglo, the tie-up is expected to result in annual cost savings and efficiency gains of $800 million by the fourth year after completion.
