Nickel and gold miner Independence Group (ASX:IGO) will acquire rival nickel miner and exploration company Sirius Resources (ASX:SIR) for $1.81bn. The execution of the scheme implementation deed (SID) was announced on Monday, with Independence agreeing to acquire all of the issued capital of Sirius via an acquisition scheme of arrangement. The transaction is believed to create an entity with a pro forma market capitalisation of around $2.7bn, making it a leading ASX-listed mining company with significant strategic value and strong cash flow.
The acquisition will be implemented through two inter-conditional schemes of arrangement and a capital reduction to effect the demerger transaction. In exchange for their shares, Sirius shareholders will receive 0.66 IGO shares for every one Sirius share, cash consideration of 52c per Sirius share, and 2.5 shares for every one Sirius share of the new S2 listing. The S2 listing is a demerger of the Polar Bear and Scandinavian exploration assets, including the newly discovered Baloo gold deposit. The new independent listing will be called S2 Resources Limited.
The deal is valued around $1.81bn for all issued shares. The $4.38 per share acquisition offer comes at a 35 per cent premium to the previous $3.24 trading price of SIR. The board of Sirius has unanimously recommended that shareholders approve the acquisition deal. The vote to approve the acquisition will be held in August. Shares of SIR have jumped sharply on Monday, although they have not hit the $4.38 acquisition offer price yet. SIR is up 71c, or 21.91 per cent, at $3.95 per share around 1:03pm on Monday. SIR has advanced 27.33 per cent in the last 12 months and 54.69 per cent so far this year. Shares of IGO have plummeted 62c, or 10.60 per cent, at $5.23 per share.
Author: Simon Herrmann
May 25, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.