"Statement regarding possible offer
The Board of Sirius Minerals Plc ("Sirius" or "the Company") announces that it is in advanced discussions with Anglo American Plc ("Anglo American") regarding a possible all cash offer of 5.50 pence per Sirius share for the entire issued, and to be issued, share capital of Sirius (the "Proposal").
The Proposal represents a premium of:
- 34.1% to the closing price of 4.10 pence per Sirius share on 7 January 2020, being the last business day prior to the date of this announcement;
- 46.5% to the volume-weighted average price of 3.75 pence per Sirius share since the 17 September 2019 Strategic Review Announcement up to 7 January 2020;
- 53.4% to the one month volume-weighted average price of 3.59 pence per Sirius share up to 7 January 2020; and
- 61.7% to the three month volume-weighted average price of 3.40 pence per Sirius share up to 7 January 2020
Subject to the successful outcome of on-going discussions (including satisfactory assurances as to the safe-guarding of employee and other stake-holder interests and the agreement of the full terms and conditions of any offer), the Board of Sirius has indicated to Anglo American that it expects to be able to recommend a firm offer for Sirius if made by Anglo American at the price set out in the Proposal.
There can be no certainty that any firm offer will be made. Anglo American has expressly reserved the right to:
- Reduce the offer consideration by the amount of any dividend or other distribution or return of capital which is paid or becomes payable by Sirius after the date of this announcement
- Introduce other forms of consideration and / or to vary the composition of the consideration
- Make an offer for Sirius at any time on less favourable terms:
o With the agreement or recommendation of the Board of Sirius; or
o If a third party announces a firm intention to make an offer for Sirius on less favourable terms; or
o If Sirius announces a "whitewash" transaction.
This announcement has been made with the consent of Anglo American.
In accordance with Rule 2.6(a) of the Code, Anglo American is required, by not later than 5.00 p.m. (London time) on 5 February 2020, being 28 days after today's date, to either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Takeover Panel (the "Panel") in accordance with Rule 2.6(c) of the Code.
The person responsible for the release of this announcement on behalf of the Company is Nick King, General Counsel."
"J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority. J.P. Morgan Cazenove is acting as financial adviser exclusively for Sirius and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Sirius for providing the protections afforded to clients of J.P. Morgan Cazenove, or for providing advice in relation to any matter referred to herein."
But will they build the mine to full production ...
"Anglo American plc ("Anglo American") notes the announcement released today by Sirius regarding a possible offer for Sirius by Anglo American.
Anglo American confirms that it is in advanced discussions with Sirius in relation to a possible offer at a value of 5.5 pence per Sirius share, in cash (the "Proposal"). The Proposal would value the entire issued share capital of Sirius at approximately £386 million.
In September 2019, Sirius announced that it was undertaking a strategic review in order to assess the development plan for its North Yorkshire polyhalite project (the "Project") and an appropriate financing structure to provide relevant funding. Sirius also announced that the strategic review would include a broader process to seek a major strategic partner in the Project. In November 2019, Sirius provided an update on the progress of this strategic review, including a revised two-stage development plan.
Anglo American identified the Project as being of potential interest some time ago, given the quality of the underlying asset in terms of scale, resource life, operating cost profile and the nature and quality of its product. The Project has the potential to fit well with Anglo American's established strategy of focusing on world-class assets, particularly in the context of Anglo American's portfolio trajectory towards later cycle products that support a fast-growing global population and a cleaner, greener, more sustainable world.
Anglo American believes that the possible offer could provide certainty to Sirius' shareholders, whilst Anglo American brings the financial, technical and marketing resources and capabilities to progress the Project over time. This should also be in the interests of Sirius' broader stakeholders including employees and customers. Anglo American notes the following key attributes from its initial assessment:
- Asset quality: Anglo American believes that the Project has the potential to become a world-class, low-cost and long-life asset. Sirius has progressed the development of the Project to an advanced stage, with construction now under way for over two years. Sirius has indicated that this is currently the world's largest known high-grade polyhalite deposit with a JORC Reserve of 290 million tonnes, with a grade of 88.8%, and a Resource of 2.69 billion tonnes. The Resource indicated by Sirius has the scale, thickness and quality to be mined efficiently using bulk mining methods through a relatively simple, low-energy, non-chemical production process. Sirius has indicated that the Project could operate at an EBITDA margin potentially well in excess of 50% leaving the Project well positioned for strong through-the-cycle profitability with a long anticipated asset life.
- Development pathway: At this stage, the Project requires a significant amount of further financing to develop and commission the operation that has proven challenging for Sirius to procure on an economic basis. Anglo American, as one of the world's leading mining companies, has the resources and capabilities to help build on the achievements of the Sirius team. Anglo American remains committed to its disciplined capital allocation framework. During the first two years after an offer is successfully completed, development work on the Project is expected to be broadly in line with Sirius' revised development plan although Anglo American intends to update the development timeline, optimise mine design and ensure appropriate integration with its own operating standards and practices. Anglo American believes that there is the potential for long-term benefits from Anglo American's technical expertise in both the development and operational phases, as well as from Anglo American's recognised Operating Model to drive safety and productivity to world-leading standards. Integration into Anglo American's global Marketing network would provide full mine-to-market capabilities and build on Anglo American's institutional experience in the world's major fertiliser markets.
- Premium product: Sirius' polyhalite product, POLY4, is a multi-nutrient fertiliser certified for organic use and has the potential to generate demand at a competitive cost that supports a strong margin. POLY4 is an attractive low-chloride alternative to traditional potassium-bearing mineral products on a cost-effective basis. It includes four of the six key nutrients that plants need to grow - potassium, sulphur, magnesium and calcium. The use of fertilisers is one of the most effective ways to improve agricultural yields and therefore help to address the anticipated future imbalance between food, feed and biofuel demand and supply caused by a fast-growing global population and limited additional land availability for agricultural use.
Anglo American reserves the following rights:
- To reduce the offer consideration by the amount of any dividend or other distribution or return of capital which is paid or becomes payable by Sirius after the date of this announcement
- To introduce other forms of consideration and / or to vary the composition of the consideration
- To make an offer for Sirius at any time on less favourable terms:
* with the agreement or recommendation of the Board of Sirius; or
* if a third party announces a firm intention to make an offer for Sirius on less favourable terms; or
* if Sirius announces a "whitewash" transaction
In accordance with Rule 2.6(a) of the Code, Anglo American is now required, by not later than 5.00 pm (London time) on 5 February 2020, the date 28 days after today's announcement, to either announce a firm intention to make an offer for Sirius in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for Sirius, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.
There can be no certainty that any offer will be made. A further statement will be made as appropriate."
So presumable (?) if you don't sell your shares and the offer takes place you get Anglo American shares ... eventually.
And the mine gets built.
Oh "Its just a case of selling when the SP reaches 5.5p or waiting for the pay out - its a total cash offer so no shares in AAL."
To be continued...
There were two very interested parties.
You would expect the company to have the grace to make a recommendation or statement in plain language what this means for local stakeholders.