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IGO’s revised $1.26b bid for Western Areas deemed ‘not fair but reasonable’

Sean SmithThe West Australian
Wed, 27 April 2022 4:16PM
Sean Smith


A truck emerges from the Spotted Quoll mine at Western Areas’ Forrestania nickel operations. Credit: KIM CHRISTIAN/AAPIMAGE

Nickel miner Western Areas directors are sticking with their endorsement of IGO’s new takeover bid, even though the revised $1.26 billion offer falls short of an independent valuation.

Court approved takeover documents set to be sent to Western Areas shareholders on Thursday include an updated assessment by KPMG that rates IGO’s $3.87-a-share offer as “not fair but reasonable”.

However, in the absence of a higher counter offer, Western Areas told its shareholders on Wednesday that its directors continued to unanimously back the bid.

In December, Western Areas endorsed a $3.36-a-share bid by IGO, only to rethink its position two weeks ago on the back of the sharp rise in nickel prices after Russia’s invasion of Ukraine.

IGO subsequently increased its offer, noting “the continuing strong nickel price performance and the subsequent impact on valuations of companies operating in the sector”.

The offer will go before Western Areas shareholders in Perth on June 1.

IGO’s purchase of Western Areas will significantly lift its annual production of nickel, which is seen as a key metal in the transition to clean energy.

The company has been on an expansion drive that has also netted it a stake in the world’s biggest lithium mine at Greenbushes, south-east of Perth, in partnership with Chinese group Tianqi and US company Albemarle.
Its fledgling joint venture with Tianqi includes a half share of a lithium hydroxide plant at Kwinana that is now in an extended recommissioning.

Western Areas shares added 1¢ to $3.85, while IGO jumped 18¢ to $12.95.