Teck Resources, Anglo American Agree to Merge. The Stocks Are Surging.

Coming into Tuesday trading, Teck Resources stock was down about 13% this year. Anglo American stock was down about 2%. (RAUL BRAVO/AFP via Getty Images)

Miners Teck Resources and Anglo American have agreed to a “merger of equals,” creating one of the largest copper miners in the world, with a combined market value of about $53 billion.

The companies announced the deal on Tuesday. Anglo shareholders will get a special dividend of $4.19 per share before the merger is completed and will own 62.4% of the combined company. The deal will take 12 to 18 months to complete.

Combining operations is expected to generate some $2.2 billion in annual synergies. Teck is expected to generate 2025 earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $2.8 billion. Anglo American is expected to generate 2025 Ebitda of about $6.1 billion.

Teck Resources’ stock rose 11.3% to $39.07, while the S&P 500 and Dow Jones Industrial Average rose 0.3% and 0.4%, respectively. Anglo American stock rose 9.1% to £24.90.

Net of the dividend paid to Anglo shareholders, the combined market value is about $49 billion. Peer miners BHP and Southern Copper have market values of about $140 billion and $84 billion, respectively. Shares of BHP rose early, but closed down 1.9%. Southern Copper stock traded as high as $106, but closed down 3.4% at $99.91.

“We are unlocking outstanding value both in the near and longer term—forming a global critical minerals champion with the focus, agility, capabilities, and culture that have characterised both companies for so long,” said Anglo American CEO Duncan Wanblad in a news release.

“This merger of two highly complementary portfolios will create a leading global critical minerals champion headquartered in Canada—a top five global copper producer with exceptional mining and processing assets located across Canada, the United States, Latin America, and Southern Africa,” added Teck CEO Jonathan Price.

Investors appear to agree. The combined value of both companies is up about 10%, or $5 billion, in Tuesday trading.

Coming into Tuesday trading, Anglo American stock was down about 2% this year. Teck Resources’ stock was down about 13%. Copper prices, at $4.58 a pound, were up about 14%.

Write to Al Root at allen.root@dowjones.com