SQM learns from Liontown’s situation with $1.6b deal for Azure Minerals, as Mark Creasy and Gina Rinehart loom

The flurry of lithium deal activity in WA is ramping up as Chilean chemical giant SQM and Azure Minerals agree to a $1.63 billion takeover — but two mining billionaires have emerged as potential roadblocks to the deal. Azure announced on Thursday that it had signed a binding implementation transaction with SQM. The two-pronged takeover offer encompasses a scheme of arrangement priced at $3.52 a share, but if that fails SQM will launch a conditional off-market takeover bid at $3.50. For a scheme of arrangement to proceed 75 per cent of the votes must be in favour of the takeover from at least 50 per cent of shareholders on the register who vote. The scheme of arrangement bid represents a 44 per cent premium to Azure’s last closing price on Friday of $2.44 and will require Foreign Investment Review Board approval before going ahead. The Azure board has recommended shareholders vote in favour of the scheme and accept the off-market takeover offer if the scheme is not successful. The West Australian understands billionaire prospector Mark Creasy, a major shareholder in Azure with a 13.2 per cent stake, is still assessing his position on the offer but is likely to accept the bid. SQM will be barred from voting on the scheme with its 19.9 per cent stake in Azure and as a condition of the deal no other shareholder can amass a 19 per cent stake or else the scheme deal is off. The off-market bid will enable SQM to expand its stake beyond the 20 per cent threshold with no minimum requirement for a takeover, firmly cementing its position as Azure’s number one shareholder. Sources close to the deal have told The West Australian that the two-pronged approach was formulated from the fallout of Albemarle’s failed bid for Liontown Resources via a scheme of arrangement. That $3 per share bid was scuppered by Gina Rinehart’s Hancock Prospecting building a 19.9 per cent blocking stake. Liontown’s price is now languishing at around $1.75 per share. There is market speculation that Gina Rinehart may be buying up Azure shares in light of the SQM bid, but if she spoils the scheme deal the mining billionaire will likely have to duel it out with SQM on market to hoover up the remaining shares in Azure. Delphi Group, which controls around 10 per cent of the Azure register, has thrown its support behind SQM’s scheme of arrangement proposal. Azure managing director Tony Rovira said the SQM bid was in the best interests of shareholders. “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,” he said. “As such, the board believes that the transaction provides Azure’s 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.” Azure entered a trading halt before the market opened on Monday regarding “a potential change of control transaction”. SQM, which is Azure’s largest shareholder, was widely tipped to be the suitor. Filings to the Australian Securities Exchange on October 13 revealed that Mr Creasy’s Yandal Investments acquired $16m of Azure shares to take its shareholding from 12.1 per cent to 13.2 per cent. This occurred less than two weeks prior to Azure going into trading halt. The lithium hopeful previously announced in mid-August that it knocked back a $901 million bid from SQM, describing the bid as “underdone”. The SQM bid was lobbed on July 12, valuing Azure’s shares at $2.31 each. Shares in Azure had surged 687 per cent over the past 12 months up to its trading halt on Friday. Azure’s core focus is the West Pilbara-based Andover project, which is prospective for a bevy of battery metals encompassing lithium, nickel, copper and cobalt. Azure has a 60 per cent stake in Andover, with the remaining 40 per cent owned by Mr Creasy’s other key investment vehicle, the Creasy Group. In the space of less than two years Andover has evolved from a nickel-focused endeavour to a diversified battery metals project that has attracted plenty of market interest. SQM is part of the Covalent Lithium joint venture with Wesfarmers. Covalent operates the $2.6b Mt Holland mine in the Goldfields and is developing the Kwinana lithium hydroxide refinery. Earlier this week SQM also acquired a 30 per cent stake in the Pirra Lithium JV in the Pilbara, which was previously a 50/50 JV between Calidus Resources and Haoma Mining, as the Chilean giant seeks to rapidly expand its footprint amid the ongoing lithium land grab in WA.