Mining major Anglo American PLC is in advanced talks to acquire London-listed Sirius Minerals PLC for about 5.5 British pence per share in cash, or about £386 million.
The potential offer would represent 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. Anglo noted that there can be no certainty that any offer will be made.
Anglo American said Jan. 8 that it is eyeing Sirius' North Yorkshire polyhalite project in the U.K., which it believes has the potential to become a low-cost and long-life asset.
Sirius has faced difficulties to raise funds for the second stage of development for the project. In September 2019, the company scrapped a proposed US$500 million senior secured notes offering due to poor bond market conditions.
In November 2019, Sirius adopted a two-phase funding approach, where it aims to raise US$600 million in the first quarter to allow the start of production in 2021 before seeking up to US$2.5 billion to increase the capacity to 10 million tonnes per annum by 2024.
Within two years from the deal's close, Anglo American intends to support Sirius' development plan for the project although it plans to revise the development timeline and optimize the mine design.
In a separate release, Sirius said its board has indicated its support for Anglo American's proposal. Under London listing rules, Anglo American has until Feb. 5 to lodge a firm offer.