China’s biggest lithium group seals deal for UK-listed Bacanora
UK-listed Bacanora Lithium has agreed to a cash offer valuing it at £284.8m from China’s Ganfeng Lithium, in a deal that hands China’s largest lithium producer control over a mine in Mexico.
Ganfeng said it had secured a letter of support from Bacanora’s second-largest shareholder, M&G, which owns 14 per cent of the company. Ganfeng, which needs 50 per cent of shareholders to support the deal, already owns a 29 per cent stake in Bacanora.
The 67.5p a share offer had been opposed when first announced in early May. Small shareholders said it undervalued Bacanora despite the Chinese group offering a 50 per cent premium to Bacanora’s closing share price on May 5.
On Wednesday, Mark Hohnen, chair of Bacanora, said: “We are pleased that Bacanora and Ganfeng have been able to work together efficiently to satisfy the preconditions and reach an agreement on the terms of a formal offer.”
Bacanora said that as part of the deal its shareholders would now also receive shares in Aim-quoted Zinnwald Lithium, in which Bacanora holds a 36 per cent stake. With the addition of those shares the premium rises to 63 per cent, it said.
The takeover will be the latest acquisition for Ganfeng Lithium, which is the largest listed producer of lithium in the world, following an 86 per cent rally in its shares this year.
Prices for lithium carbonate, the type of lithium used in the majority of electric-car batteries, have doubled this year, according to an index compiled by Benchmark Mineral Intelligence.
Analysts are also predicting a shortage of lithium over the next few years as sales of electric cars continue to increase.
Last month, Ganfeng paid C$343m for Canada’s Millennial Lithium, which has a project in Argentina. In June, it also paid $130m for a 50 per cent stake in the Goulamina lithium mine in Mali.
Bacanora owns the Sonora Lithium project in Mexico, which is set to start production in 2023. Situated 170km south of the US border, it is well positioned to supply the US automotive market.
Zinnwald, which is valued at £66m, is developing a lithium mine in Germany, 35km from Dresden. Zinnwald said in a statement that it “looks forward to working with potential new shareholders going forward”.
Shares in Bacanora rose 20 per cent to 67p, while those in Zinnwald fell 7 per cent to 24p.