Independence Group NL (ASX: IGO), a Western Australian-based base metals miner, has announced its intentions to acquire nickel miner Sirius Resources N.L. (ASX: SIR) in a deal worth roughly $1.8 billion.
While rumours have been circulating recently that a deal was on the cards, Independence Group made the news official this morning in an announcement to the market, stating that the two parties had entered into a binding Scheme Implementation Deed which will see it acquire all of Sirius Resources' issued capital.
Before the two entities merge however, Sirius will undertake a demerger of its Polar Bear and Scandinavian exploration assets. This demerger will create a new entity, which will be called S2 Resources Ltd, which will allow Sirius shareholders to retain full exposure to the upside potential of these assets.
The company said that Sirius Resources shareholders would receive 0.66 shares in Independence for every Sirius share they held, as well as a cash outlay of 52 cents per share. Shareholders will also receive roughly one share in S2 Resources.
The miner also believes significant value will be generated from the acquisition that will create a company with a combined value of around $2.7 billion and the potential to become an ASX100 listed entity.
Independence Group's offer, which values Sirius at $4.38 per share, represents a whopping 35% premium to Sirius' latest closing price ($3.24) while it also excludes the additional value to be generated by shareholders' exposure to the new S2. In the absence of a superior deal, Sirius' Board of Directors has unanimously backed the proposal while its major shareholder, Mark Creasy, has also provided his support for the transaction.
