Australian billionaire threatens to sink lithium deal with Chilean SQM

Australian billionaire threatens to sink lithium deal with Chilean SQM

Hancock Prospectingowned by Australia’s richest person, Gina Rinehart, threatened on Friday to torpedo a deal by the world’s second-largest lithium chemicals maker, Chile’s an Australian lithium miner.

Hancock Prospecting, an iron ore miner, acquired an 18.3% stake in Azure Mineralswhich is developing the Andover project in Western Australia, according to a filing on Friday with the Australian stock exchange.

Azure shares have risen more than tenfold this year, reaching a value of 1,560 million Australian dollars (US$991.22 million).

This is the second time in two weeks that Hancock surprises potential buyer of Australian assets with an apparent blocking stake in the target company.

Participation in Azure endangers an operation of Sociedad Química y Minera de Chile SA (SQM), which, backed by Azure’s board of directors, offered on Thursday to buy the shares of the developer that it did not already own.

“Although Andover shows good prospects, it has a long road ahead and significant risks to overcome before its definitive potential is known. “Hancock is an established Western Australian company with the ability to support and accelerate development,” Hancock said in a statement to Reuters.

Less than two weeks ago, Albemarle, the world’s largest maker of lithium chemicals, abandoned its $4.2 billion offer dollars for Liontown Resources amid “increasing complexities,” after Hancock was listed on Liontown’s registry with a 19.9% ​​stake.

SQM’s outline agreement for Azure requires 75% of voting shareholders to support the dealand already has the implicit support of about 43%, the Canaccord brokerage said in a report.

SQM also offered an off-market acquisition option —in which it would go directly to the shareholders— in the event that the agreement scheme failed. According to analysts, this is a backup option in case an “intruder” arises. The agreement is subject to no other shareholder acquiring a stake equal to or greater than 19%.

“Whether this suggests Hancock just wants to partner (i.e. he hasn’t reached 19%) or is preparing for more remains to be seen.”said Paul Howard of Canaccord. “It is possible that SQM expected it, which is why it included the takeover bid in the agreement as an alternative.”

SQM’s offer is 3.52 Australian dollars (US$2.21) per share and its off-market cash offer is A$3.50 ($2.20) per share, right where the stock closed on Friday.

Chemical manufacturers seek earlier-stage projects to secure cheaper supply, helped by a drop in lithium prices that has lowered the valuations of companies in the sector. Azure’s Andover project won’t go into production until 2030.

SQM did not immediately respond to a request for comment.. Hancock declined to provide further details and Azure declined to comment.

Azure rejected a previous purchase offer from SQM worth 901 million Australian dollars (US$568 million) in July.

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