Recently, the AU$136 million lithium acquisition by Tianqi and IGO has attracted attention due to Mineral Resources’ intervention.
On Thursday, the support rate from Essential shareholders for the acquisition was 31.5%, far below the required 75% support rate for the transaction to proceed. Tianqi and IGO have the right to terminate the scheme of arrangement based on the voting results, but they may also choose to negotiate with the Essential board on alternative ways to proceed with the acquisition within the next 24 hours.
The transaction has been impacted and hindered primarily due to Mineral Resources billionaire Chris Ellison disclosing on April 14th that it has purchased a 19.5% stake in Essential. The stock price of Essential rose to 58 Australian cents on Friday, well above the acquisition price of 50 Australian cents proposed by Tianqi and IGO in January, which prompted many investors to reject the offer and hope for a higher bid in the future.
In confirming the voting results, Essential stated in a market document that there was a significant change in the voting trend after April 11, and the acquisition seemed to be on track before Mineral Resources intervened in a “dramatic” manner. At that time, an independent expert considered the offer of 50 cents fair and reasonable, and the Essential Board recommended that shareholders accept this offer.
Tianqi and IGO competed through their joint venture company TLEA, with Tianqi holding 51% of the shares and IGO holding 49%. TLEA already owns 51% of the famous Australian lithium mine Greenbushes and 100% of the shares of the Kwinana lithium hydroxide processing plant.