Alpha Lithium Corporation (NEO: ALLI) announced on Friday that its board has unanimously recommended to its shareholders to reject the hostile offer from TechEnergy Lithium Canada, a subsidiary of Tecpetrol Investments. The board said that based on the unanimous recommendation of the special committee of independent directors, it deems the offer is not in the best interests of the company or its shareholders.
In a directors’ circular, the company board outlined several reasons to reject the “inadequate and undervalued hostile offer,” including calling the offer “highly opportunistic” and a “stink bid.”
“Tecpetrol’s offer price is below Alpha’s share price. As at June 20, 2023, the Hostile Offer price of $1.24 per Common Share was at a 13% discount to the $1.42 per share volume weighted average price since the Hostile Offer was initially made public. It is clear that shareholders believe the Hostile Offer is inadequate,” the firm said in a statement.
The company added that when considering the enterprise value in relation to the lithium resources, the Tecpetrol’s offer is notably lower compared to similar past transactions involving Argentine lithium brine projects since October 2021.
“At a price of $1.24 per Common Share, it is significantly below the target Common Share price from the independent research analyst that provides equity research coverage of Alpha, who has described the Hostile Offer as ‘not compelling’ and ‘Still a Stink Bid, In Our View’,” the company added.
Alpha also related that it has received an inadequacy opinion from PI Financial Corp., stating that the consideration offered to Alpha shareholders under the offer is financially inadequate.
“Tecpetrol is not a shareholder of Alpha and has elected NOT to become an Alpha Lithium shareholder, as of June 22, 2023,” the firm argued.
The lithium firm also said that Tecpetrol is attempting to subvert its active and ongoing strategic review where the board is evaluating various options as part of the review, including a potential sale process for its Tolillar asset and exploring corporate-level transactions. Tecpetrol’s offer disrupts these efforts and aims to acquire Alpha at the lowest possible price, according to the company.
“Alpha has attempted, unsuccessfully, to engage with Tecpetrol within the Sale Process, based on market-standard practices and agreements; even seeking to accommodate Tecpetrol’s desire to acquire the entire Company. Tecpetrol repeatedly refused to engage constructively,” the company explained.
Alpha advised its shareholders to take no action, effectively rejecting the Tecpetrol bid.
Alpha Lithium last traded at $1.40 on the NEO.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
