Alpha Lithium’s (NEO: ALLI) board of directors has recommended accepting the improved offer from Tecpetrol Investments for the acquisition of all outstanding common shares of Alpha. The offer stands at $1.48 per share in cash.
This comes after Caravel Capital Investments, a major shareholder of the company, issued an open letter endorsing Tecpetrol’s revised offer to acquire Alpha Lithium.
Tecpetrol has also expressed its approval of the Alpha Lithium board’s decision and strongly encourages Alpha shareholders to act promptly by tendering their Alpha shares.
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The board’s recommendation is said to be the result of careful deliberation and is based on several key factors. Firstly, the special committee of the board considered the disruptive impact of Tecpetrol’s unsolicited offer on Alpha’s ongoing efforts, including the sale process for its Tolillar Project and a broader strategic review that has spanned ten consecutive months. Unfortunately, these initiatives were hindered by Tecpetrol’s offer, making it challenging for the company to secure fair value for its shareholders.
As of the current date, the strategic review has not yielded a binding offer for the Tolillar Project or the purchase of common shares. The company does not anticipate such an offer materializing before the October 3, 2023 deadline, which is the expiry for Tecpetrol’s revised offer.
While the special committee acknowledges the possibility of a superior offer emerging in the future, it emphasizes that the current offer from Tecpetrol is presently the only open offer for the purchase of all outstanding shares.
Meanwhile, the committee also considered various risks and uncertainties. One notable factor is that the Tecpetrol offer remains highly conditional, giving Tecpetrol the discretion to withdraw or proceed with its offer. There is no guarantee that Tecpetrol can satisfy all the conditions of the increased offer, including the statutory minimum tender condition, which requires the deposit of common shares representing more than 50% of the outstanding shares.
Tecpetrol has indicated previously that if it is obligated to satisfy the statutory minimum tender condition but cannot complete the acquisition, it will explore alternative options, including open market purchases or privately negotiated transactions.
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.
