Glencore has become the latest company to snub the London Stock Exchange after confirming proposals to spin off and list its coal business in New York.
The FTSE 100 mining giant has announced it will acquire a majority stake in the steelmaking coal business of Canada-based Teck Resources for $6.9bn (£5.5bn), bringing to a close months of tense negotiations.
It sets the stage for a break-up of Glencore, which is proposing to split off the newly combined coal businesses into a standalone entity.
The demerger is expected to happen within 24 months of the Teck deal closing, assuming it is approved by shareholders.
But in a blow to the City, bosses on Tuesday reiterated plans to list the combined coal business in New York rather than London – with secondary listings also going elsewhere, to Toronto and Johannesburg.
The remaining Glencore group, which will focus on the “transition metals” used in electric cars and other green technologies, will remain listed in London.
Glencore proposed a New York listing for the coal business because of the large pools of capital available and a “pragmatism” among American investors who are more willing to invest in fossil fuels, a source close to the company said.
Gary Nagle, Glencore’s boss, has previously complained that European investors are overly focused on environmental, social and governance (ESG) measures as opposed to profits.
On Tuesday, he said there was a strong appetite in North American markets for a coal business, adding: “We believe we would get a better valuation for this business in New York than we would in London.”
Glencore expects the Teck deal to close in the third quarter of 2024, paving the way for a listing of the coal business by the second half of 2026.
The proposal to list in New York comes amid concerns in London about an exodus of companies going abroad or being taken private.
Earlier this year, Cambridge-based chip designer Arm also snubbed the London Stock Exchange when it decided to list its shares in New York, despite heavy lobbying by the UK Government.
It came after Aveva, the industrial software business, was delisted by French parent Schneider, of France and cyber security company Avast was bought by US-based NortonLifeLock.
Australian mining giant BHP was also among those to delist from London in 2022, with the company choosing to centralise in Australia instead.
This year, research by City broker Peel Hunt has found the London market is expected to lose up to 30 businesses worth more than £100m, amid yet more takeovers and delistings.
