Western Areas and its independent expert are reviewing terms for a planned takeover from IGO in light of volatile nickel pricing.
Western Areas and its independent expert are reviewing terms for a planned takeover from IGO in light of volatile nickel pricing.
The companies provided an update regarding the existing scheme of implementation for the deal, under which IGO was set to acquire Western Areas for $3.36 per share.
But significant nickel price volatility, that forced the London Metals Exchange to temporarily suspend nickel trading after it reached more than $US100,000 a tonne, has prompted WSA to consider its implications on the upcoming $1.1 billion takeover.
As a result, the planned deal timeline has been pushed back to commence in April as opposed to March, with full implementation now expected in May or June instead of April.
“Western Areas appointed KPMG Financial Advisory Services as the independent expert to opine on whether the Scheme is in the best interest of Western Areas shareholders, “ Western Areas and IGO said in a statement.
“In response to the recent significant nickel price volatility…Western Areas and the independent expert are continuing to consider the implications, if any, on nickel market fundamentals and expectations for medium to long-term nickel prices.”
It is unclear whether Western Areas will pursue a better price for its shares or whether the review is part of the conditions attached to the deal.
IGO said it acknowledged the recent short-term volatility but affirmed it had no obligation or current intention to increase consideration following the events.
“IGO’s valuation of Western Areas and the proposed Scheme consideration of $3.36 in cash per share is based on IGO’s long-term view of the nickel market fundamentals and price, which has not changed.
“IGO has no obligation, nor any current intention to increase the consideration in response to these short-term events (although it reserves its right to do so).”
Western Areas shares closed the day up 0.86 per cent at $3.51.
IGO shares closed down 1.96 per cent at $12.49.
