Shares of ASX-listed Azure Minerals (AU:AZS) rose over 2% today following the news of a potential takeover deal valued at AU$1.7 billion. Chilean lithium giant Sociedad Quimica y Minera de Chile SA (NYSE:SQM) has joined hands with billionaire Gina Rinehart-owned Australian miner Hancock Prospecting in offering an upgraded takeover price for Azure Minerals. The three companies confirmed the news today. Azure’s board of directors unanimously approved the offer in the absence of other superior offers.
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Azure Minerals Ltd. explores and develops high-grade lithium and nickel assets, which are must-have metals in the electric vehicle (EV) era. Azure also mines other metals such as copper, silver, zinc, and gold. Its primary mining asset is the Andover project in Western Australia’s Pilbara region. AZS shares have exploded 1577% so far in 2023.
More About the Upgraded Takeover Bid
SQM and Hancock are Azure’s two largest shareholders to date. SQM has an 18.4% stake, while Hancock holds a 19.4% stake in Azure. The duo has upgraded the offer price to AU$3.70 per share in cash, with the sweetened offer reflecting a 5.1% premium to SQM’s previous individual offer.
SQM is Chile’s largest and the world’s second-largest lithium producer. By acquiring Azure, SQM seeks to gain access to Azure’s Andover project and make an entry into Australia’s rich minerals market. Meanwhile, Hancock is one of Australia’s largest iron ore producers and a major player in the world’s iron ore market.
While the two companies have a combined stake of 37.8%, the offer requires 75% shareholder support to pass. Failing which, the duo can make an off-market takeover attempt at AU$3.65 per share, requiring a simple majority shareholder vote.
Azure’s two other major shareholders, Creasy Group and Delphi Group, which own a combined 23% of Azure, have confirmed that they are willing to sell their stakes to SQM and Hancock. The offer comes as the Australian lithium market is ripe with M&A deals amid a sharp decline in lithium prices.
Is Azure Minerals a Good Buy?
On TipRanks, AZS stock has a Moderate Buy consensus rating based on one Buy and one Hold rating. Both these ratings were given before the takeover news and are subject to change. The Azure Minerals share price target of AU$4.40 implies 19.1% upside potential from current levels.
