IGO sweetens nickel deal

IGO has won back endorsement from the Western Areas board for a proposed takeover after bumping up its offer price from $3.36 to $3.87 per share.

Peter Bradford’s IGO and Andrew Forrest-backed Western Areas informed the market this morning that they had agreed to an increased scheme consideration, after WSA’s independent advisor KPMG determined the initial bid was too low.

The re-evaluation was in light of significant nickel price volatility and prompted the companies to re-enter negotiations last week while Western Areas considered KPMG’s findings. 

In the interim, the WSA board withdrew its support for the existing offer.

"The purpose of the consultation process was to provide an opportunity for IGO to present a revised proposal, that Western Areas considered was in the best interests of Western Areas shareholders," Western Areas said in a statement today. 

That consultation process has allowed IGO to win back the support of the Western Areas board after increasing its offer by an additional 51 cents per share, taking the overall deal from roughly $1.1 billion to approximately $1.26 billion.

IGO boss Peter Bradford noted that nickel prices had been strong since first announced the deal in December  2021.

"We have observed continued strong nickel price performance and the subsequent impact on valuations of companies operating within the sector," Mr Bradford said in a statement. 

"Notwithstanding our view that the recent extreme trading and volatility in the nickel market will be short term in nature, IGO recognises that these higher prices have resulted in stronger financial performance from WSA compared to IGO’s assumptions at the time the Initial Scheme was announced in December 2021."

IGO said that substantial Western Areas shareholder, Wyloo Consdoliated, was in support of the amended scheme.

“The Western Areas Board is pleased to have negotiated an agreement with IGO considering the recent volatility in the nickel price and the positive impact this has had on Western Areas cashflow position and fundamental asset value since the Initial Scheme was announced on 16 December 2021," Western Areas chair Ian Macliver said. 

Western Areas and IGO have also agreed to extend the end date under the scheme implementation deed to the end of July this year.

IGO's latest bid is in absence of a superior proposal. 

IGO and Western Areas shares are both trading higher at $14.09 and $3.85.