£386m offer to take over listed fertiliser development company
Scarborough-based Sirius Minerals has today confirmed it is in “advanced discussions” about a possible takeover of its business by mining giant Anglo American PLC.
The discussions relate to a possible all cash offer of 5.50 pence per Sirius share for the entire issued, and to be issued, share capital of Sirius. The offer would value the entire issued share capital of Sirius at approximately £386m.
The proposal represents a premium of 34.1% to the closing price of 4.10 pence per Sirius share on 7 January 2020, which was the last business day prior to the date of this announcement.
Sirius Minerals is behind a North Yorkshire polyhalite mine project, which saw its $500m/£390m financing plan collapse in September last year.
The company subsequently published a review which said that parts of the mining project would be delayed, while it seeks to raise an initial US $600m/£469m by the end of March 2020 to fund the construction of the mineshafts and first section of tunnel only.
Sirius wants to extract polyhalite, a form of potash containing potassium, sulphur, magnesium and calcium. The product would be used by farmers to help improve crop yields.
Today’s takeover office notice adds: “Subject to the successful outcome of ongoing discussions (including satisfactory assurances as to the safe-guarding of employee and other stake-holder interests and the agreement of the full terms and conditions of any offer), the Board of Sirius has indicated to Anglo American that it expects to be able to recommend a firm offer for Sirius if made by Anglo American at the price set out in the proposal.”
The notice explains that there can be no certainty that any firm offer will be made.
A statement released this morning by Anglo American says it had identified Sirius Minerals’ mining project as being of potential interest “some time ago”.
The statement adds: “The project has the potential to fit well with Anglo American’s established strategy of focusing on world-class assets, particularly in the context of Anglo American’s portfolio trajectory towards later cycle products that support a fast-growing global population and a cleaner, greener, more sustainable world.
“Anglo American believes the possible offer could provide certainty to Sirius’ shareholders, whilst Anglo American brings the financial, technical and marketing resources and capabilities to progress the project over time.
“Anglo American believes the project has the potential to become a world-class, low-cost and long-life asset.
“Sirius has progressed the development of the project to an advanced stage, with construction now under way for over two years.
“Sirius has indicated the project could operate at an EBITDA margin potentially well in excess of 50%, leaving the project well positioned for strong through-the-cycle profitability with a long anticipated asset life.
“At this stage, the project requires a significant amount of further financing to develop and commission the operation that has proven challenging for Sirius to procure on an economic basis.
“Anglo American, as one of the world’s leading mining companies, has the resources and capabilities to help build on the achievements of the Sirius team.”
