Canadian Teck Resources Ltd (TECK.US) has reached a merger agreement with Anglo American Group, creating what would become one of the world's largest copper producers with a combined market value exceeding $53 billion. However, analysts believe this acquisition could face challenges from potential competing bidders.

Under the proposed merger structure, Anglo American shareholders would hold 62.4% of the new entity, while Teck Resources Ltd shareholders would own 37.6%. Based on Teck Resources Ltd's Monday closing price, the transaction represents a 17% premium. However, Anglo American plans to distribute a $4.5 billion special dividend to its investors before the merger, leading both companies to emphasize to shareholders on Tuesday that this essentially constitutes a zero-premium acquisition.

The insufficient premium could potentially trigger competing bids. Teck Resources Ltd CEO Jonathan Price stated that any potential bidding war would be beyond the company's control.

National Bank analyst Shane Nagle indicated that other companies might also make acquisition offers for Teck Resources Ltd, particularly since the company's value has been affected by issues related to the Quebrada Blanca mine. Nagle commented: "Until the situation regarding the ongoing expansion of the Quebrada Blanca operations becomes clearer, multiple interested parties may be willing to pay premium valuations for the company's portfolio."

Berenberg Bank analysts Richard Hatch and William Dalby noted that Glencore has previously attempted to acquire Teck Resources Ltd and could potentially be viewed as a competitor again, though cultural differences might impede such an acquisition. The Berenberg analysts stated: "Given BHP's capacity to expand its copper business, we believe BHP could also be a potential bidder, but the best synergies appear to be achievable through a deal with Anglo American Group."

Canaccord Genuity analyst Dalton Baretto observed: "It's not just Teck Resources Ltd that faces takeover risk." He believes Anglo American is equally vulnerable to competing acquisition offers as Teck Resources Ltd. Baretto explained: "In many ways, acquiring Anglo American Group is almost more likely than acquiring Teck Resources Ltd, as the former faces less resistance. Acquiring Anglo American wouldn't require strict review by Investment Canada, nor would it need to address dual-class share structure issues. Moreover, Anglo American Group is similar to Teck Resources Ltd in many respects, just larger in scale."

Jefferies analysts commented: "We have been anticipating a new wave of mining industry consolidation, and this event could be the beginning of that wave."

The Anglo American-Teck Resources Ltd transaction includes a $330 million breakup fee clause, with both companies expecting the merger to complete within the next 12 to 18 months. The deal also faces resistance from shareholders.

One Teck Resources Ltd shareholder indicated that the company's value exceeds what Anglo American has agreed to pay, suggesting additional favorable terms may be needed to complete the transaction. "We believe Teck Resources Ltd is worth more than the value implied by the transaction price," said Alex Garriock, senior analyst at Canoe Financial.

Data shows Canoe Financial holds a 0.5% stake in the Vancouver-based Teck Resources Ltd. Based on Teck Resources Ltd's Tuesday closing price of CAD 54.29 per share on the Toronto Stock Exchange, these shares are valued at approximately CAD 130 million (USD 94 million). Garriock stated: "Therefore, we believe a higher price may be necessary to complete this transaction."

Garriock added that shareholders might welcome a bidding war, though he did not reveal the identities of potential bidders.

Citigroup analysts also noted that given Teck Resources Ltd's underperformance compared to peers year-to-date, the premium appears "very low."

As of Tuesday's U.S. market close, Teck Resources Ltd rose 11.28% to $39.07. The stock has declined 3% year-to-date.