Rockwood bows out of Talison takeover
Talison's major customer, Chengdu Tianqi, finds itself alone now in pursuing a takeover of the junior lithium miner.
Author: Kip Keen Posted: Wednesday , 12 Dec 2012
SEATTLE, WA (MINEWEB) -
The fight forTalison Lithiumwill as things stand go down as a skirmish rather than a battle. Talison said today that it andRockwood Holdingshad agreed to exit a takeover agreement worth C$724 million, which the two had entered in August.
The withdrawal, to cost Talison C$7 million in a break fee, was perhaps no surprise. When Talison’s main lithium customer, Chengdu Tianqi, made a superior offer earlier this month with C$847 million in cash @ C$7.50 a share, Rockwood said it was not interested in a getting involved in a takeover battle. Its initial offer was its best and final, Rockwood said.
The statement might have been interpreted as posturing, but clearly it was not. Talison alluded to the fact last week when its board recommended shareholders go with the Chengdu bid over Rockwood’s, which it had previously supported. Rockwood had five days to match Chengdu’s bid, officially, but a Talison spokespersontold Mineweb it was the company’s opinion under Australian securities rules that Rockwood had effectively closed the door on being able to make a better offer after it had said its “best and final” bid was on the table.
Market players took Talison’s opinion to heart. In the days since Talison rendered that view of securities rules, Talison’s shareprice has traded a dime or so below the C$7.50 a share Chengdu has offered to Talison shareholders.
Rockwood had at one point tried to sow a seed of doubt about the Chengdu offer, suggesting that while it might be higher, the offer was more conditional than its own and that Talison shareholders might end up with no deal at all if they eschewed Rockwood for Chengdu. But the argument, made before Chengdu made its official C$7.50 offer, lost some significance once Talison’s board threw its lot behind its major customer and noted that there were few strings attached with Chengdu's bid. Gone was previous wording from Chengdu of the need for a period of “limited” due diligence.
What will Rockwood do now? It’s an interesting question. Its bid for Talison clearly showed that it is hungry to buy a producing lithium asset. While a Rockwood spokesperson could not be reached for comment, the question remains as to whether it is still in the hunt to buy either producing, development or exploration assets.
Yet one thing is certain. There is not another asset quite like Talison, which, with production from the Greenbushes hard rock lithium mine in Australia, accounts for almost a third of the lithium market. Indeed, combined, Rockwood and Talison would have controlled about half the lithium market, a fact Chengdu stated it was not overly keen about.
In that - Talison’s dominant place in the lithium market - analysts frequently referred to Talison as “unique opportunity” in intervews withMineweb. They noted that there just isn’t another production asset like it out there to buy and thus there is no simple alternative candidate for Rockwood to consider as an equal to Talison.