ACG Acquisition Co’s $1 billion metals deal, initially promising as it included a prominent global miner and top automakers as anchor investors, has hit a dead end due to prolonged negotiations, the London-listed special purpose acquisition company (SPAC) announced on Thursday. The deal aimed to secure ownership of both a nickel mine and a copper mine from Appian Capital, driven by the growing demand for metals in support of the global green energy transition.
In June, Glencore, Stellantis (parent company of Chrysler), and Volkswagen’s battery unit, PowerCo, had expressed their commitment to support the acquisition through equity investments, with expectations for the deal to finalize in August.
However, ACG’s statement lamented the inability to reach a consensus on the revised acquisition agreement: “ACG announces today that, despite its best efforts, revisions to the acquisition agreement have not been agreed, and the acquisition agreement has been terminated.”
Notably, ACG, Appian Capital, and Glencore refrained from offering comments on the matter.
Sources have revealed that the primary setback stemmed from the lack of interest among minority investors during the $300 million equity offering stage of the deal, despite the participation of Stellantis and Glencore as anchor investors.
The situation was further exacerbated by weakening economic indicators from China, the world’s largest metals consumer, which had been observed since August and dampened investor enthusiasm for the deal.
In 2023, nickel prices experienced a significant 37% decline, while copper prices dropped by 2%. One source familiar with the matter emphasized, “The deal fell apart over price,” citing that the agreed-upon price exceeded what the buyers deemed feasible, especially following the decline in nickel prices.
Appian Capital remained steadfast in its desire to uphold the original agreement, while one of the anchor investors attempted to alter their position, according to a third source.
Furthermore, it became apparent that one of the buyers sought to renegotiate the terms only after ACG’s equity raise encountered limited interest from investors, as revealed by a fourth source.
SPACs, which are essentially shell companies that raise capital through initial public offerings (IPOs) and subsequently merge with private firms to take them public, were on the cusp of witnessing a significant milestone with ACG’s listing in London—the first mining SPAC listing of its kind.
It’s worth noting that Appian Capital had previously initiated legal proceedings against South Africa’s Sibanye-Stillwater in a $1.2 billion claim a year ago after Sibanye withdrew from a deal involving the same two mines, further underscoring the complexities surrounding high-value mining agreements.
Information for this briefing was found via Mining.com and the sources 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.