Shares in Atlantic Lithium Ltd (ASX: A11) have jumped more than 10% after the company said it had agreed to a takeover by a Chinese company.
Share price upside on the table
Atlantic Lithium said in a statement to the ASX that it had entered into a binding scheme of arrangement with Zhejiang Huayou Cobalt Co. to be taken over for a price of 35.4 cents per share.
The company’s shares immediately jumped on the news to be changing hands for 31.5 cents, up 12.5%.
The takeover will be executed in cash and values the company at about $292 million.
The company said its board had considered the offer and found that it “provides Atlantic Lithium shareholders with the most attractive, certain, and accelerated realisation of value on a risk-adjusted basis versus other strategic alternatives”.
Atlantic Lithium’s board is unanimously recommending the deal in the absence of a superior proposal and subject to an independent expert concluding that the scheme is in the best interests of Atlantic Lithium shareholders.
The company said its largest shareholder, Assore International Holdings Limited, which owns 26.4% of the company, had indicated it would vote in favour of the scheme.
Atlantic Lithium Chief Executive Officer Keith Muller said regarding the deal:
The Atlantic Lithium Board has undertaken a detailed evaluation of its strategic options in relation to maximising shareholder value assessed on a risk-adjusted basis and concluded that the Huayou proposal offers an attractive proposition for Atlantic Lithium shareholders, particularly when considered amid ongoing lithium price volatility, complex jurisdictional challenges and against the timing and execution risks attached to financing, developing and operating the Ewoyaa Lithium Project under the Project’s current joint venture arrangements. Huayou’s proposal acknowledges Ewoyaa as a highly attractive hard rock lithium asset capable of serving the growing global electric vehicle and energy storage markets. We welcome the endorsement of the Company’s major shareholder, Assore, towards the Transaction, which is intended to facilitate a clearer direction for the Project towards the achievement of first production of lithium. In doing so, the Transaction is expected to accelerate the delivery of the substantial benefits anticipated for Ghana through the construction and operation of the Project, including, notably, the socio-economic development of the Project’s host communities.
The Ewoyaa project, once developed, would be Ghana’s first lithium mine.
Second approach
Atlantic Lithium said in its most recent quarterly report that it had ceased discussions with “an undisclosed entity in respect of a potential corporate transaction, following the receipt of a conditional, non-binding, indicative change of control proposal for the acquisition of 100% of the Company’s share capital by way of a scheme of arrangement”.
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