An ongoing reorganization of Lithium Americas (TSX: LAC) is not stopping it from conducting major transactions. The firm this morning revealed that it will be acquiring Arena Minerals (TSXV: AN) as it looks to expand upon its assets in the Pastos Grandes basin.
The transaction will see Arena acquired for US$227 million (C$311 million), which implies a purchase price of $0.67 per share. The figure is said to represent a 28% premium to yesterdays closing price, and a 27% premium to the 20 day volume weighted average price.
The argument for the purchase of Arena being made by Lithium Americas is that it will consolidate the Pastos Grandes Basin, with Arena currently holding land tenures next to Lithium Americas own tenures in the Salar de Pastos Grandes, which the latter acquired via the purchase of Millennial Lithium in December 2021. The development of Lithium Americas’ Pastos Grandes project, and Arena’s Sal de la Puna project are expected to be integrated on a go forward basis, resulting in a larger scale project with cost synergies for both projects.
The transaction is subject to the approval of 66.7% of Arena’ shareholders via a special meeting, as well as the required regulatory and court approvals. Termination fees of US$9.1 million have been put in place for both parties for “certain specified circumstances,” with the transaction expected to close by the third quarter of 2023.
As part of the arrangement, Gangfend Lithium, whom owns 16% of Arena on an undiluted basis, has agreed to enter a support and disposition agreement, which will see it sell its securities of Arena prior to closing of the deal. Any securities not sold under the arrangement will be acquired for cash by Lithium Americas, up to a maximum cash payment of C$75 million.
Lithium Americas last traded at $29.51 on the TSX.
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