CA - Wall Street Breakfast Podcast: Teck Resources Sells Coal Business

2023-11-14 06:41:42 ET

Summary

• Teck Resources is selling its coal business to Glencore, Nippon Steel and POSCO.
• Bayer is withdrawing its drug Aliqopa from the US market after a failed study.
• Boeing is increasing production of Patriot missile sensors to meet rising demand.

Listen below or on the go on Apple Podcasts and Spotify

Teck Resources ( TECK ) to sell coal business to Glencore (GLNCY). (00:21) Bayer ( BAYRY ) pulling lymphoma drug from US market over failed study. (01:39) Boeing ( BA ) expands factory to boost output of Patriot missile sensors. (02:19)

This is an abridged transcript of the podcast.

Teck Resources (NYSE: TECK ) is selling its coal business at an implied enterprise value of $9B.

Glencore ( OTCPK:GLCNF ) announced that it is acquiring 77% of the business for $6.9B in cash. In addition, Teck has also entered into an agreement with Nippon Steel Corporation for a 20% stake and POSCO for the remaining 3%.

The deal is subject to regulatory approval in Canada.

The transaction is expected to close in Q3 2024.

The WSJ report on Monday, citing people familiar with the matter, the deal could be announced as soon as this week.

Teck ( TECK ) has been weighing a potential sale of the coal business as part of a comprehensive business review, as it tried to fend off a $23B takeover offer from Glencore earlier this year.

Teck ( TECK ) CEO Jonathan Price said last month that the company had received multiple suggestions from investors on how to separate its coal and metals businesses, and he was hoping to make a decision on the split by year-end .

Teck Resources confirmed in June that Glencore approached the company about buying its coal assets, providing an alternative to Glencore's ( OTCPK:GLCNF ) original proposal for a full-blown merger of the two companies.

Bayer AG ( OTCPK:BAYRY ) ( OTCPK:BAYZF ) is reportedly withdrawing its lymphoma drug Aliqopa from the US market due to a confirmatory study failing to show the drug provided a progression-free survival benefit over standard immunochemotherapy.

The drug received accelerated approval from the FDA in 2017 for the treatment of follicular lymphoma in patients who had already received at least two prior systemic treatments. Full approval was dependent on a confirmatory study showing clinical benefit.

Bayer is exploring options for patients who appear to have benefitted from the drug, but has advised against prescribing it to new patients.

Boeing (NYSE: BA ) has started building a bigger factory in Huntsville, Alabama, to make sensors for Patriot missiles amid rising demand worldwide.

Boeing announced on Monday that the expanded facility is expected to start operations in early 2027.

This will increase Boeing’s ( BA ) yearly production of Patriot Advanced Capability-3 ((PAC-3)) by more than 30%.

Following an onslaught of Russian missile and drone attacks on military and civilian targets in Ukraine, the Biden administration last year agreed to supply the country with a Patriot air-defense system.

The U.S. military has sought to rebuild inventories of weapons after sending those aid shipments to Ukraine.

Other articles to look out for on Seeking Alpha:

Consumer price index expected to slow in October; core inflation seen stalling

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U.S. probes ~100 tankers for suspected violations of Russia oil sanctions - Reuters

On our catalyst watch for the day,

• ESPN BET will go live in 17 states; Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. ESPN will also start using official odds provided by ESPN BET across editorial and other content. Penn Entertainment ( PENN ) has secured the exclusive right to the ESPN Bet trademark for online sports betting in the U.S. for an initial 10-year term, which may be extended for additional 10 years upon mutual agreement.

• Philip Morris International ( PM ) Chief Executive Officer Jacek Olczak will hold a presentation and Q&A session at the CECP CEO Investor Forum.

U.S. stocks on Monday ended near the flatline, with markets taking a bit of a breather after posting back-to-back weekly gains. Market participants largely had no reaction to a move by Moody's to cut the country's credit outlook.

The Nasdaq ( COMP.IND ) closed 0.22% lower. The S&P 500 ( SP500 ) slipped by 0.08%, while the Dow ( DJI ) added 0.16%.

Of the 11 S&P sectors, six closed in the red, led by Utilities and Real Estate. Energy and Health topped the gainers.

Treasury yields were mixed. The 10-year yield ( US10Y ) was little changed at 4.64%. The 2-year yield ( US2Y ) was down 3 basis points to 5.03%.

Today’s October consumer inflation report will be one of the main highlights this week. Economists are expecting a M/M decline in the headline number. October's CPI is expected to rise 0.1% M/M, compared with a 0.4% increase in September. On a Y/Y basis, it's expected to rise 3.3%, down from 3.7% in the previous month. Kim Khan will have complete analysis of the report on today’s edition of Wall Street Lunch. The podcast is published by noon.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is down 0.06%, the S&P 500 is up 0.04% and the Nasdaq is up 0.16%. Crude oil is up 0.3% at more than $78 per barrel.

In the world markets, the FTSE 100 is down 0.45% and the DAX is up 0.3%. The market in India is closed for a holiday.

The biggest movers for the day premarket: Snap (NYSE: SNAP ) is up 5% following reports that Amazon.com ( AMZN ) has agreed to allow users to make direct purchases from ads within the Snapchat app. And the Beauty Health Company (NASDAQ: SKIN ) is down 52% after lowering its FY2023 net sales guidance due to lower-than-expected U.S. revenue and restructuring charges for device upgrades.

On today’s economic calendar:

• 8:30 am Consumer Price Index

• 10am the Fed’s Michael Barr will testify before the U.S Senate Committee on Banking, Housing and Urban Affairs

• 11 am the Fed’s Loretta Mester will give opening remarks at an event, “Conversations on Central Banking: The Unequal Burden of Inflation”

• 12:45 pm the Fed’s Austan Goolsbee will speak about economic and monetary policy at an event in Detroit.

For further details see: