The world’s largest zircon miner, Iluka Resources, has warned the company’s proposed $375 million acquisition of London-listed Sierra Rutile could be abandoned after the German competition watchdog pushed the deal proposal into a longer review process.
The German Antitrust Authority has decided to refer the deal to a “phase two” review, which can take up to three months, Iluka said in a statement to the exchange.
It is understood the authority determined it needed more time to consider the proposal given the opaque and complex nature of the mineral sands market.
Under the terms of companies’ merger implementation agreement, they have five business days to agree on how to proceed and if they are unable to reach agreement, either party may terminate the deal.
It is understood Iluka’s intentions have not changed and the miner remains confident Sierra Rutile will still pursue the transaction.
Iluka’s former managing director David Robb, who retired last week, said at the release of the company’s full year results last month that if the deal was to proceed Iluka was “confident the application of its industry-specific technical expertise, together with its market access and reach” would enhance the Sierra Rutile business.
The news stalls the deal’s progress just days after a majority of Sierra Rutile shareholders gave it their approval despite the revelation the Sierra Leone government could impose a capital gains tax on the merger.
Sierra Rutile said on Thursday 99.96 per cent of the votes were cast in favour of all three resolutions required to approve the merger.
Swiss-based private equity group Pala Investments has a 53 per cent stake in Sierra Rutile.
The tilt at Sierra Rutile is Iluka’s second attempted offshore acquisition in a year after it failed to acquire Ireland-based, Mozambique-focused Kenmare Resources.
The acquisition talks were terminated in December 2015 after more than a year, Iluka blaming Kenmare’s largest shareholder for not backing its all-scrip offer.
Read more: http://www.afr.com/business/mining/iluka-resources-acquisition-of-sierra-rutile-stalled-by-german-authorities-20160906-gr9ly2#ixzz4JW1KrIfR
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