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SQM, shareholders go to court to block US$4B Tianqi Lithium entry

Sociedad Quimica y Minera de Chile SA filed a motion with an antitrust court in Chile to reconsider a settlement between the Chilean National Economic Prosecutor Office, or FNE, and Tianqi Lithium Corp.

Tianqi is acquiring a 24% stake in SQM — one of the world's largest lithium producers — from Nutrien Ltd. for about US$4.07 billion, with the transaction targeted for completion in the fourth quarter of 2018. Lithium is a key component in batteries used in consumer electronics and electric vehicles.

The antitrust court approved the settlement between the regulator and the Chinese company that intended to limit the exchange of commercially sensitive information between the parties, Reuters reported Oct. 5.

The settlement would also prevent Tianqi from appointing its executives or employees to SQM's board and require the company to notify regulators of any future, lithium-related agreement with either SQM or rival Albemarle Corp.

The Chilean lithium miner said Oct. 11 that FNE had pointed out and verified that the transaction posed several risks to competition, and ruled out that deal would result in efficiencies.

SQM, which has previously objected to the settlement, said in the motion filed with the antitrust court that the measures are not effective to limit Tianqi's access to sensitive information, which could harm the company and the market.

Reuters reported separately that Pampa Group, SQM's controlling shareholder, filed a lawsuit with Chile's Constitutional Court to block the SQM stake sale to Tianqi. Shareholders Pampa Calichera, Potasios de Chile and Global Mining are collectively known as Pampa Group.

The legal action claims that the antitrust court failed to follow due process when it approved a settlement between Tianqi and the Chilean regulator.

"The opportunity given to my clients to learn, understand and then opine on a deal worth more than [US]$4 billion, which generates enormous competitive risks for SQM, was five days, and nothing more," said lawyers for the shareholders, urging the court to suspend the settlement.