Anglo American to purchase Sirius Minerals for $404.9 million cash offer

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Jan 20, 2020
Updated: Mar 11, 2020
  • Anglo American to purchase Sirius Minerals for $404.9 million cash offer.
  • Sirius Minerals shareholders will receive 5.50 pence per share following the acquisition.
  • Sirius Minerals gained 1.9% in stock market following the announcements while Anglo American traded 0.4% higher.
  • Sirius chairman highlights risks for investors and the UK at large if the deal collapses.
  • Sirius Minerals have been struggling to survive following its failure to raise $500 million via a bond sale to complete the Britain's largest North Yorkshire polyhalite mine.

The UK-based fertilizer development company, Sirius Minerals, has been struggling to survive in the past few months. On Monday, however, Anglo American made an announced that it has decided to purchase Sirius Minerals for its cash offer worth $404.9 million. The move highlighted Anglo American’s return to the fertilizer industry while saving Sirius Minerals from a cash crunch.

Sirius Mineral’s Shareholders To Receive 5.50 Pence Per Share Following The Acquisition

As per the sources, shareholders of the UK’s Sirius Minerals have been offered 5.50 pence per share (cash). Compared to Sirius’s stock price on January 7th, it marks an around 34% premium for the shareholders. Anglo American announced its negotiations with Sirius Minerals on January 8th. Following the announcement, Sirius Minerals was seen trading 1.9% higher later in the day while a 0.4% improvement was witnessed in Anglo American’s shares.

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Sirius Minerals had announced its plan of Britain’s largest mining project, the North Yorkshire polyhalite mine, in 2017, when the fundraising for the project also began. Following the company’s failure in raising $500 million via a bond sale last year, Sirius Mineral has faced grave challenges in getting sufficient bank financing to move ahead with its project.

According to Sirius Mineral’s chairman, Russel Scrimshaw:

“We now face a stark choice. If the acquisition is not approved by shareholders and does not complete, there is a high probability that the business could be placed into administration or liquidation within weeks thereafter.”

Sirius Chairman Highlights Risks For The Investors If The Deal Falls Apart

According to the experts, Anglo’s purchase of Sirius Minerals is also likely to help hundreds of workers keep their jobs in Northern England that were previously put at risk due to falling opportunities; an issue that was particularly highlighted in the UK’s general election on December 12th that saw the Prime Minister Boris Johnson’ winning the majority in the Parliament once again.  

Sirius Chairman also highlighted that in an event that the deal collapses, the shareholders will be exposed to a massive risk of losing their entire investment in one of the largest Britain’s projects. The country at large, he added, will be deprived of the associated benefits as well. Following the commodity market crash, Anglo American had let go of its Brazilian fertilizer project in 2016 that marked a complete exit of the British mining company from the fertilizer industry. With the recent acquisition that expanded its portfolio, however, the firm is now all-set to slide its roots back into the aforementioned sector.

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