Teck Plans to Focus on Smaller Takeovers

Article Excerpt

TECK COMINCO LTD. $86 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is the world’s secondlargest supplier of zinc, behind Xstrata plc. Manufacturers add zinc to steel to prevent it from rusting. Zinc accounts for about a third of Teck’s profits. The company is also a leading producer of lead, copper and gold, and owns 40% of the Elk Valley Coal Partnership, which supplies metallurgical coal to steelmakers. Fording Canadian Coal Trust owns the other 60% of Elk Valley. Earlier this year, Teck failed in its bid to merge with nickel producer Inco Ltd. Consequently, Teck converted its Inco convertible debentures into shares, and tendered the stock to the Brazilian mining firm that acquired Inco. That generated a pre-tax gain of $135 million. To put that in context, Teck earned $2.28 a share (total $495 million) from continuing operations in the three months ended September 30, 2006, up 21.3% from $1.88 a share ($405 million) a year earlier. The latest…

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