Major investors in takeover target Azure Minerals Ltd (ASX:AZS, OTC:AZRMF) are close to striking a partnership pact that could settle the battle for control for the Western Australian lithium explorer, according to a report in the Australian Financial Review.
Trading in Azure shares on the ASX has been suspended in anticipation of an announcement regarding the A$1.6 billion takeover offer from Chile's Sociedad Quimica Y Minera (SQM), which was backed by Azure's board on October 26.
Key investors in Azure that have been actively purchasing shares following SQM's bid are likely to form a partnership arrangement, the report said.
SQM has upper hand
SQM, holding a 19.9% stake in Azure, is joined by notable shareholders, including Gina Rinehart's Hancock Prospecting with 18.3% and Chris Ellison’s Mineral Resources, owning 13.56%.
Renowned explorer Mark Creasy maintains a 12% stake in Azure through his company, Yandal, which also directly owns 40% of Azure’s primary Andover lithium exploration project in Western Australia.
SQM, central to any probable agreement, possesses a multi-faceted influence on Azure: a 25% claim on future lithium production, a 19.9% shareholding, and an existing $1.6 billion deal with Azure’s board.
SQM’s $3.52-per-share offer, accepted by Azure’s directors, includes exclusivity clauses.
Battle tactics
Hancock Prospecting has publicly expressed interest in partnering in a Western Australian lithium project as a minority shareholder.
This year, Rinehart's company acquired a 19.9% stake in Liontown Resources (ASX:LTR), disrupting Albemarle’s full acquisition plans and underscoring its intent to shape company operations.
The value of Hancock’s $1.3 billion investment in Liontown has since halved following Albemarle's withdrawn offer, influencing the Azure acquisition landscape.
Plan B
SQM anticipated a similar scenario in its bid for Azure and, with guidance from Macquarie advisers, incorporated a contingency plan in the deal.
This alternative strategy, involving purchasing Azure shares on the market at $3.50 if the initial bid failed, signalled SQM's willingness to collaborate with partners on the Andover project, acknowledging the improbability of gaining complete control.
An update from Azure to the market is expected by Wednesday.