Why I think that if IGO bids it needs to be at least $4.00 per share., page-4

Hi@SnowballKelvin

You are absolutely correct. After all the net Tropicana receipts and Tianqi payments are settled IGO had net cash of $528m at 30 June. So at $9.30 IGO has an EV of $6.5bn. At $3.06 per share WSA has a EV of $795m. So the exchange ratio based on current trading prices is 8.2x. It has to improve.

On the adjusted numbers, a bid for WSA at a $1bn EV (~$3.80 implied share price) using IGO at $9.30 gives an exchange ratio of ~6x (6.5/1.0). So ~$4.00 per share is still around the mark that I think the deal seems "fair" for WSA given IGO needs to pay if they want control. If there is a cash component to the offer you'd also accept a lower bid from IGO.

WSA will argue that forecast lithium prices are probably too aggressive and IGO's future earnings will probably be lower then what consensus has. They will also argue that all of their development options at New Morning etc have significant value that isn't included in simple earnings merger modelling. IGO will probably argue that their earnings should be worth more given the market seems to value lithium earnings on a higher multiple.

@HomeBrand The data is from Bloomberg.