SQM launches $1.63 billion takeover offer for Azure Minerals

Chilean mining and chemicals powerhouse SQM has launched a $1.63 billion dollar takeover offer for Australian battery minerals developer Azure Minerals (ASX: AZS).

SQM, the world’s largest lithium producer, has made two separate offers to acquire 100% of Azure’s shares.

The two companies have signed a binding transaction implementation deed for the proposed acquisition of 100% of Azure’s shares by way of a scheme of arrangement for a cash amount of $3.52 per Azure share and a simultaneous conditional off-market takeover offer for a cash amount of $3.50 per Azure share should the scheme be unsuccessful.

The scheme consideration of $3.52 per Azure share implies a fully-diluted equity value for Azure of $1.63 billion, while providing a 44.3% premium to the last closing price of $2.44 per Azure share on Friday, 20 October 2023.

The new offer is also a 52.4% premium to SQM’s previous proposal of $2.31 per Azure share which was unveiled in August 2023.

Andover project the main attraction

Azure’s main asset is its battery metals-rich Andover project in Western Australia’s Pilbara region.

An Andover exploration target has been published, encompassing an estimated range of potential mineralisation of 100 to 240 million tonnes grading at 1.0% to 1.5% lithium oxide.

Azure’s managing director, Tony Rovira, said the company’s board has unanimously recommended the transaction in the absence of a superior proposal and other conditions.

One of Azure’s major shareholders, Delphi Group, has already indicated it intends to support the transaction and has confirmed it also intends to vote all of the Azure shares that they directly or indirectly own or control in favour of the scheme, and in the event that the scheme is not successful, accept those Azure shares held or controlled by them into the takeover offer.

In the best interest of shareholders

“Having carefully considered the merits of the transaction, the Azure board has unanimously concluded that the transaction is in the best interests of Azure shareholders,” Mr Rovira said.

“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. 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.”

A scheme meeting is expected to be held in late January or early February 2024 and if the Azure shareholders vote in favour, court approval hearings for the scheme would be implemented shortly thereafter.

Barrenjoey is acting as financial adviser and Corrs Chambers Westgarth as legal adviser in relation to the transaction.

More Australian moves

The Azure takeover move comes just days after it was revealed that SQM would be joining Calidus Resources (ASX: CAI) in developing the Pirra lithium project in Western Australia.

SQM has agreed to provide significant new funding and acquire a 30% interest in the Pirra project operator, Pirra Lithium, from project partner Haoma.

By providing $3 million in new funding for the Pirra project, SQM will increase its total stake in Pirra Lithium to 40%.

The proceeds from SQM’s investment will be largely be used to fund exploration expenditure on Pirra’s projects.

Calidus has also entered into a commitment letter with Pirra where it will subscribe for $2 million of Pirra shares following completion of the new SQM deal.