‘They really offered it at a premium’: Nutrien sells stake in Chilean lithium producer for $4.1B
In an indication of how scorching the lithium market is, Canadian fertilizer producer Nutrien Ltd. offered a 24 per cent stake in Sociedad Quimica y Minera de Chile S.A. for $4.07 billion, at a wholesome premium.
The purchaser, China’s Tianqi Lithium Corp., agreed to pay $65 per share for the Chilean producer, which represented a premium on the $58 buying and selling value, which stunned some analysts, as antitrust regulators in China and India had required Nutrien — the corporate fashioned by the merger of Potash Corp. of Saskatchewan and Agrium Inc. — to promote its stake in SQM as a situation of the deal.
“The worth appeared good,” stated John Chu, an analyst with Laurentian Financial institution Securities. “As a result of Nutrien had given superior discover that they needed to promote it, and since it was such a big block of shares, it was thought that they must promote it a reduction, they usually really offered it at a premium.”
Nutrien has stated it might use proceeds from the deal as a part of its $1.5 billion share buyback, for a part of its $eight billion in debt discount or for different functions.
In complete, Nutrien owns a 32 per cent stake in SQM. The present sale, which the corporate stated ought to shut within the fourth quarter, solely pertains to its roughly 62.5 million class A shares, representing 24 per cent of SQM.
It additionally owns roughly 20 million class B shares, representing a further eight per cent of the corporate, which it plans to promote by April 2019 to additional fulfill antitrust regulators, in response to Richard Downey, a spokesman for Nutrien.
SQM produces each lithium and potash, and the antitrust regulators in India and China have been involved about Nutrien’s dominance within the potash market, he stated.
Tianqi is a significant lithium provider in China, listed on the Shenzen Inventory Trade, and in addition has a presence in Australia.
Chile’s former authorities in March had tried to dam the sale of SQM to any Chinese language patrons, saying “it could distort the worldwide lithium market and provides China an unfair benefit in securing strategic sources,” in response to Reuters.
SQM is the second-largest lithium producer on the earth after U.S.-based Albemarle Corp.
Downey dismissed stories that Chilean regulators have raised antitrust issues a couple of Chinese language firm shopping for its stake in SQM. Though the sale of sophistication A shares include three board seats in SQM, it’s only a minority place within the firm. He stated the corporate is anticipating regulatory evaluate solely from Chinese language and Indian regulators associated to the potash market.
“It shouldn’t set off any regulatory evaluate that we’re conscious of,” stated Downey. “They’re shopping for some shares in an organization, they’re not controlling something.”
So far as Nutrien’s determination to promote the category A and B shares individually, Downey stated he didn’t know the precise causes.
“They got here in, they have been within the A shares — I’m not going into something greater than that,” he stated.
However Laurentian’s Chu stated some traders imagine splitting the category A and sophistication B shares might have been an a technique to alleviate any potential antitrust issues by Chilean regulators have a couple of Chinese language purchaser, since it’s a smaller stake.
“It’s fairly potential that the deal involving solely the A shares was an olive department (to the regulators),” he stated.
Nutrien inventory dipped simply over half a per cent to $65.76 per share on the Toronto Inventory Trade on Thursday afternoon.
With a file from Thomson Reuters