Perth-based mining company Talison Lithium has accepted a sweetened takeover proposal from China’s Chengdu Tianqi Industry Group, which trumped a competing proposal from an international chemicals company.
Chengdu, which is currently Talison’s largest customer, has lifted its offer to C$7.50 cash per share, valuing Talison at C$848 million (A$823 million).
Its successful offer will allow a profitable exit for private equity investor Resource Capital Funds, which in 2007 paid $205 million for the tantalum and lithium assets of failed mining group Sons of Gwalia.
RCF, which is based in Denver but has a major Perth office, subsequently supported a major restructuring of these assets and further investments in their operations.
The restructuring included a merger of Talison with Canadian company Salares Lithium, followed by a listing on the Toronto Stock Exchange.
Privately held Chengdu’s initial offer, announced last month, was priced at C$7.15 per share.
That followed an earlier offer from chemical company Rockwood Holdings priced at C$6.50 per share.
The latest offer is at a 77 per cent premium to the last traded price of Talison stock of C$4.24 per share, prior to announcement of the Rockwood offer in August.
RCF, which holds a 36 per cent stake in Talison, has confirmed it will accept the Chengdu offer, in the absence of a superior proposal.
Chengdu already holds a 19.9 per cent stake in Talison.
It has lodged a US$25 million deposit in an Australian bank, as a reverse break fee.
If the Chengdu proposal is accepted, Talison will be required to a pay a C$7 million break fee to Rockwood.
Talison was advised by Macquarie Capital and law firm Clayton Utz in Australia.
Chengdu was advised by RedBridge Grant Samuel and Australian law firm Allens.