September 13, 2016 By Mohamed Massaquoi
Mineral sands miner, Iluka Resources’ £215 million proposed acquisition of Sierra Rutile could be abandoned as the German Antitrust Authority probes the merger.
A report from the Global Africa News stated that on 1st September 2016, the resolutions required to approve the merger were passed by the requisite majority of Sierra Rutile’s shareholders.
However, the merger remained conditional on prior clearance of the German Antitrust Authority.
On 5 September 2016, the German Antitrust Authority advised both companies that it had decided to refer the merger to a “Phase 2” review, which can take up to three months.
In accordance with the provisions of the Merger Implementation Agreement (the MIA) dated 31 July, 2016, Iluka and Sierra Rutile now have five business days to agree how to proceed in respect of the Phase 2 review. If the parties are unable to reach agreement on how to proceed in respect of the Phase 2 review, either party may terminate the MIA. Iluka would further provide further information to shareholders as soon as practicable.
As originally announced, the acquisition would be implemented by merging Sierra Rutile with Iluka Investments (Iluka Newco), a wholly-owned incorporated subsidiary of Iluka International (West Africa).
As part of the acquisition, Sierra Rutile shareholders would receive 36 pence cash for each Sierra Rutile share. Iluka Resources also agreed to also assume Sierra Rutile’s debt of approximately US$60 million.
The acquisition is expected to approximately double Iluka’s rutile resource base and secure ownership of an operation, with a long history in the minerals sands industry that currently produces approximately 130 000 of rutile, with expansion potential up to 240 000 tons.
Iluka MD, David Robb believes the acquisition would provide the company with additional, long life (20 years plus) resources of proven quality, with further potential through resource additions, reserve optimization and exploration, further enhancing its rutile portfolio position as the largest global zircon producer.
It could be recalled that 29 July 2016, the Board of Sierra Rutile Limited note the announcement made by Iluka Resources Limited of acquiring the company.
A press release from the UK states that the company has received an approach for the issued and to be issued share capital of the Company at a price of 36 pence per ordinary share in cash and those discussions were at an advanced stage.
Sierra Rutile is a leading, multi-mine mineral sands company, operating world-class assets and developing a portfolio of growth projects in the south west of Sierra Leone, with its primary commodity mined being natural rutile, a titanium feedstock.
The Company has an established operating history spanning approximately 50 years and a resource mine life of another 50 years with one of largest natural rutile deposits in the world and a JORC-Compliant Mineral Resource.