IGO Ltd (ASX:IGO) to buy nickel producer Western Areas for over AU$1B

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IGO Ltd (ASX:IGO) to buy nickel producer Western Areas for over AU$1B

ASX IGO, IGO acquires Western Australia, Western Australia acquisition
Image source: © Ronstik | Megapixl.com

Highlights 

  • IGO Limited announced to acquire Western Areas Limited in an all-cash transaction of AU$3.36 per share.
  • The deal is subject to certain conditions, including Western Areas shareholders’ approval.
  • Western Areas shareholders will be eligible to receive a cash amount of A$3.36 per Western Areas share.

Shares of lithium and nickel miner IGO Limited (ASX:IGO) grabbed the spotlight after the mining company announced to acquire Western Areas Limited in an all-cash deal valued at AU$1.09 billion.

According to company’s release, Western Areas Limited (ASX:WSA) has entered a Scheme Implementation Deed (SID) with IGO’s wholly-owned subsidiary - IGO Nickel Holdings Pty Ltd. The scheme is expected to implement in April 2022.

RELATED READ - Western Areas’ Odysseus Mine Development reaches First Ore

The deal is subject to certain conditions, including Western Areas shareholders’ approval and the approval of the Supreme Court of Western Australia. However, the scheme is not subject to any due diligence conditions.

As per the agreement, IGO Nickel will acquire 100% of the share capital of Western Areas by way of the scheme of arrangement. On implementing the scheme, each Western Areas shareholder will be eligible to receive a cash amount of A$3.36 per Western Areas share.

Key points- 

The scheme consideration implies an equity value of nearly AU$1,096 million, representing a

  • A 35.5% premium to Western Areas’ undisturbed closing share price of A$2.48 per Western Areas share on 18 August 2021.
  • A 36.5% premium to Western Areas 30-day volume-weighted average price (VWAP) of its closing share price of A$2.46 before 18 August 2021.
  • A 39.6% premium to Western Areas 90-day (VWAP) of WSA shares before 18 August 2021 of A$2.41.

IGO Nickel will fund the transaction utilising IGO’s existing cash reserves of A$552 million and a combination of a new A$900 million senior-secured debt facility underwritten by CBA, ANZ and NAB.

IGO shares closed trading 1.41% higher at AU$10.78 on ASX on Thursday.

About Western Areas 

Western Areas is an Australian mining and exploration company having a portfolio of operational and emerging nickel mines with targeted production of over 15,000 tonnes per annum of nickel in concentrate for more than ten years.

Shares of WSA closed at AU$3.42, up 5.55% on ASX today.

Bottomline

The transaction is likely to maximise the value of WSA shareholders and simultaneously enhance WSA’s exploration portfolio.

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