Mining giant Anglo American PLC agreed to acquire London-listed Sirius Minerals PLC for 5.5 British pence per share in cash, valuing the target at about £404.9 million.
As announced in early January, the purchase price represents a 34.1% premium to Sirius' Jan. 7 closing price of 4.10 pence per share and a 61.7% premium to the company's three-month volume-weighted average price of 3.40 pence per share.
The deal, which was struck before the Feb. 5 deadline, is expected to close by March 31. Sirius' board intends to unanimously recommend that shareholders vote in favor of the transaction during a court meeting and a general meeting.
Sirius has been struggling to secure funds for the second-stage development of the North Yorkshire polyhalite project in the U.K. The company said Jan. 20 that Anglo American's offer was the only viable proposal it received, as other alternative financing solutions it explored were not acceptable.
Sirius admitted that the offer's returns were not what shareholders had hoped for but noted that the company faces a "high probability" of being placed into administration or liquidation if the deal does not proceed.
"Given the current cash constraints of Sirius, and lack of realistic and deliverable alternative financing and development options, we believe this to be a fair approach from Anglo American, a company committed to approaching the project in the right way, and with the resources to complete the job," Sirius Chairman Russell Scrimshaw said.
Rating agency Moody's recently said the deal may increase Anglo American's financial risk profile for a number of years.