Commodities, Finance, Lithium, News

Why SQM won’t be felled by Rinehart

Azure lithium

A safety net has been embedded into SQM’s $1.63 billion offer to acquire lithium upstart Azure Minerals, which could be enough to see off Gina Rinehart.

There are two layers to the proposed transaction: one involving a scheme of arrangement that would see SQM acquire 100 per cent of Azure for $3.52 per share. Simultaneously, an off-market takeover comprising $3.50 per share has been launched should the scheme of arrangement not be successful.

Looking closer at the conditions for each layer, for the scheme of arrangement to go ahead, no shareholder, apart from SQM, can acquire more than a 19 per cent interest in Azure.

If this does occur, then a condition-light off-market takeover acts as the safety net, enabling the deal to go through even if a keen investor is nipping at Azure’s heels.

Albemarle was within a whisker of acquiring Liontown Resources and its advanced Kathleen Valley lithium project, before a late push from Gina Rinehart’s Hancock Prospecting seemed to have disinterested the US lithium major.

Hancock Prospecting worked its way up the Liontown register to become the company’s largest shareholder with a 19.9 per cent shareholding.

Azure has assured its shareholders that they are in good hands with SQM developing its prized Andover lithium project in Western Australia.

“Whilst we firmly believe that Andover has the potential to be a major lithium project, there is significant time, cost and risk associated with developing a project of this scale, particularly in the context of an uncertain broader economic outlook,” Azure managing director Tony Rovira said.

“As such, the board believes that the transaction provides Azure shareholders with a compelling opportunity to de-risk their investment and realise certain value at an attractive premium to historical trading levels.

“The transaction also presents a great outcome for other stakeholders in Andover, who will benefit from the project being developed by an experienced, well-capitalised and highly regarded company in SQM.”

SQM chief executive officer Ricardo Ramos echoed Rovira’s sentiment.

“SQM is Azure’s largest shareholder, with a shareholding of approximately 20 per cent and the Andover lithium project fits perfectly in with our lithium business portfolio,” he said.

“The expertise we have gained developing the Mount Holland lithium project, also located in Western Australia, along with more than 20 years in the lithium business, should enable us to successfully develop this project.”

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