The Azure Minerals Ltd (ASX: AZS) share price has gone bananas after a takeover deal was agreed with SQM.
Azure Minerals share price
Azure Minerals has the “multi-commodity, battery metals-rich Andover Project”, with the key focus being lithium. Sociedad Quimica y Minera de Chile (SQM) is a Chilean (South America) lithium business.
Takeover agreed
Azure Minerals has agreed to be taken over by SQM for a cash amount of $3.52 per Azure share. It has also offered a conditional off-market takeover offer of $3.50 per Azure share if the scheme is not successful.
The offer price of $3.52 is a 44.3% premium to the last closing Azure share price of A$2.44 . It also represents a 52.4% premium to SQM’s previous proposal on 15 August 2023.
This transaction is subject to limited conditions, including SQM obtaining approval from FIRB. The offer is not subject to any financing or due diligence conditions and the takeover offer is not subject to any minimum acceptance condition.
Board likes the deal
The Azure board has unanimously recommended the transaction in the absence of an even stronger offer at a higher Azure share price, and it’s subject to the independent expert concluding that the offer is in the best interests of Azure shareholders.
One of Azure’s major shareholders, Delphi Group, intends to support the transaction, as long as there isn’t a better proposal to emerge.
The Azure managing director Tony 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.
Final thoughts on the deal for Azure shares
I’m not an expert on mining projects, but this seems like a good outcome for shareholders considering the offer represents a large premium. It gives a certain return for investors.
SQM must think it can extract good value out of the deal, but it’s interesting with the Azure Minerals share price up more than 1,100% over the past year.
If I were a shareholder, I’d happily sell now and invest in another lithium miner, such as Pilbara Minerals Ltd (ASX: PLS).
