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Tianqi close to announcing deal for stake in SQM: Reuters
Posted on Wednesday, 16 May 2018 13:17
Chilean lithium producer Sociedad Quimica Y Minera (SQM) could be bringing on a new investor as Tianqi Lithium of China nears a deal for a 24.0 per cent stake, two people familiar with the situation told Reuters. According to the sources, the interest could go for about USD 4.30 billion and is part of a plan by Canadian fertiliser company Nutrien, which owns 30.0 per cent of the target, to divest its holding by March 2019. The owner was formed by the merger of Agrium and Potash Corp of Saskatchewan and as part of regulators approving this deal the company has until next year to offload its stake in SQM. Chengdu-headquartered Tianqi plans to fund the transaction through bank and mezzanine loans and its own working capital, the people told Reuters, adding discussions with lenders and institutional investors have already begun. Citic and China Citic Bank are among those considering financing the suitor in the deal, the insiders noted. The sale of Nutrien’s interest has been in the public eye since July 2017 and over these months a number of other potential acquirors have expressed interest in SQM. With a significant presence in fertiliser production, the target also manages annual lithium carbonate capacity of 48,000 tonnes in Chile, which it expects to expand to 70,000 in mid-2018 and 100,000 by 2019. GSR Capital, a Chinese private equity firm, has also been weighing a purchase of the stake, the two people said, though at this time it is unclear if the firm is seeking financing. Despite the interest from Asia, the Chinese government has criticised regulators in Chile for trying to block the sale of SQM. An ambassador to the South American country told local paper La Tercera that such a tie up could leave negative influences on the development of economic and commercial relations. Nutrien is expected to announce the disposal of its holding in SQM by the end of second quarter and if a transaction with Tianqi goes ahead, the buyer would gain three seats on the target’s board, one of the sources observed. The Santiago-headquartered chemical company had a market capitalisation of USD 14.75 billion yesterday. © Zephus Ltd