IGO’s proposed acquisition of Western Areas has hit a snag amid claims that an independent report prompted the WSA board to potentially reconsider its endorsement of the $3.36 per share offer.
Western Areas entered a trading halt this morning while it considered a draft independent report on its upcoming $1.1 billion merger with fellow WA nickel play IGO, which has not yet been published.
The announcement comes weeks after WSA first advised it would be reviewing terms for the deal with KPMG Financial Advisory Services in light of volatile nickel pricing, pushing the scheme of implementation timeline back to May or June instead of April.
IGO followed up with an announcement to the ASX shortly after the Western Areas trading halt, advising it understood that its takeover target intended to change its recommendation on the scheme.
“IGO’s understanding of the primary reason for this trading halt is that the Independent Expert engaged by Western Areas has concluded in its draft Independent Expert’s Report (IER), which IGO has not sighted, that the Scheme is neither fair nor reasonable to Western Areas shareholders,” IGO said in a statement.
“As a result, the Board of Western Areas intends, based on the terms of the current Scheme, to adversely change its recommendation to vote in favour of the Scheme and terminate the Scheme Implementation Deed with IGO,” IGO said.
The Peter Bradford-led company maintained that its $3.36 per share offer was based on the company’s long-term view on nickel market fundamentals and pricing despite recent volatility in the nickel price.
Western Areas is yet to make a further statement on the matter, but is expected to emerge from the trading halt on or before Thursday.
Macquarie Capital is IGO’s financial adviser and Herbert Smith Freehills is its legal.
IGO shares were down 2.43 per cent to trade at $14.64.
