A couple of possibilities for next weekHaving held shares a couple of years ago in an oil company that made a deal with Chinese for a buyout during a phase of significant revaluation of oil companies, I will share what happened then.
This was a time that oil had come off its highs of $100 the year before but there were still hopes it would return. When those hopes got dashed, oil went to nearly $30 after a deal had been struck with the Chinese to buy Long Run Exploration. The crash in oil stocks was stronger, but similar to the recent pullback in lithium stock the last couple of months.
Needless to say, the Chinese financiers got cold feet and the company buying had difficulty with financing. The deal was always going to go until the last minute. What occurred was two things: delays and reduced prices more than once. This occurred several times until a larger, somewhat related Chinese company stepped in and closed a deal at a lower price. As I mentioned, valuations were dropping much faster for oil companies at that time than what we have seen with lithium companies but nonetheless, the parallels are there.
LIX execs' assurances and share buying are cold comfort. The truth is they don't know if this deal will close. With the Chinese, you never have a deal until you have the cash. Even the assurances of the Chinese at the other end is never reliable. I have no doubt they want to close this deal but are stuggling to keep it together because of what has happened since January for valuations, then the Morgan Stanley report. Investors have discounted this stock for the possibility of a delay and/or a price change. All lithium companies have been assigned lower valuations because of Morgan Stanley's (and other banks) warning of the risk of oversupply and lower prices. That is where the Chinese are stuggling to keep their end in the game. Chances are fairly high that we will see a mutually agreed to delay announced late next week while they continue to work on financing alternatives.
My guess is that this deal will close, but not next week and depending on market conditions, the price may get adjusted. Obviously insiders are confident that they will make money at Friday's prices and that is always a good sign.