Hancock and SQM $1.1B Azure Minerals Bid

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Hancock and SQM $1.1B Azure Minerals Bid

n a stunning turn of events, Australia‘s mining powerhouse Hancock Prospecting and lithium giant Sociedad Química y Minera de Chile (SQM) have announced a joint venture to launch a bold A$1.7 billion ($1.1 billion) bid for Azure Minerals Ltd. This unexpected collaboration follows a twist in the narrative, as it seemed that Hancock was poised to thwart SQM’s initial efforts to acquire Azure back in October.

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Hancock and SQM $1.1B Azure Minerals Bid : The Dynamic Bid Structure

In a synchronized move, all three companies, Hancock, SQM, and Azure, released statements on Tuesday confirming the audacious deal. The proposed bid, set at A$3.70 in cash per Azure share, underscores the shared determination of Hancock and SQM. Intriguingly, the companies have also introduced a backup plan—an “off-market takeover offer” of A$3.65 per share in case the primary bid faces challenges.

Implications of the Offer

The A$3.70 per share bid translates to a fully-diluted equity value of A$1.7 billion for Azure, as highlighted in Azure’s official statement. Importantly, Azure’s board unanimously supports the transaction, urging shareholders to back the bid, contingent upon a favorable independent expert’s report and the absence of a superior proposal.

Hancock and SQM $1.1B Azure Minerals Bid : Stalwarts Behind the Bid

Hancock, led by the dynamic duo of executive chair Gina Rinehart and CEO Garry Korte, stands as a prominent mining and agricultural force. Meanwhile, SQM has carved its niche as one of the world’s premier lithium producers.

Navigating Past Turmoil

This collaborative move by Hancock and SQM replaces the previous SQM deal disclosed in October. Azure’s managing director, Tony Rovira, expressed optimism, emphasizing the substantial value increase despite market volatility and recent lithium price fluctuations.

Hancock and SQM $1.1B Azure Minerals Bid : A Strategic Partnership

Hancock, having successfully thwarted Albemarle’s $4.2 billion bid for Liontown Resources, clarified that the partnership with SQM, Azure’s two largest shareholders, offers “higher cash consideration and greater execution certainty.” This dispels previous uncertainties surrounding Hancock’s motives.

Support from Major Shareholders

Significantly, two of Azure’s major stakeholders, Creasy Group and Delphi Group, owning approximately 13% and 10% stakes, respectively, have pledged support for the transaction, according to statements released on Tuesday.

The Andover Lithium Project: A Crown Jewel

Hancock and SQM, owning a combined 37.8% of all Azure shares, see themselves uniquely positioned to tackle the challenges of Azure’s prized Andover lithium project in Western Australia. Azure holds a 60% stake in this project, considered the crown jewel of its portfolio.

Hancock and SQM $1.1B Azure Minerals Bid : Market Warning and Legal Allies

However, Hancock has issued a cautionary note, citing “softness in lithium markets and pricing.” The company warns that Azure’s share price could face a substantial decline if the deal encounters obstacles. Legal counsel for Azure in this high-stakes transaction is being provided by Corrs Chambers Westgarth, with financial advisory from Barrenjoey.