The IGO Ltd (ASX: IGO) share price is in the red on Wednesday amid reports the company could increase its takeover bid for nickel producer, Western Areas Ltd (ASX: WSA) to up to $4 per share.
The acquisition appeared certain in December, but the surging Western Areas share price, likely boosted by the rising nickel price, put a dampener on IGO's hopes yesterday.
At the time of writing, the IGO share price is trading at $14.42, 0.96% lower than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) has slipped 0.67% on Wednesday. Additionally, the company's home sector, the S&P/ASX 200 Materials Index (ASX: XMJ), is down 1.62% right now.
Meanwhile, the Western Areas share price remains frozen. The freeze is understood to be due to an independent expert assessment of IGO's takeover offer.
Let's look at what's going on with IGO's stock on Wednesday.
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Could IGO's takeover bid be boosted to $4?
The IGO share price is in the red today amid rumours it's prepared to up its takeover offer for Western Areas.
IGO's offer to buy the nickel producer for $3.36 per share – valuing the company at $1,096 million – was recommended by the Western Areas board late last year.
However, the soaring price of nickel – driven by Russia's invasion of Ukraine – has seemingly put the transaction in danger.
When the pair first announced IGO's takeover offer, the Western Areas share price was trading around $3.24. As of Monday's close, it was trading at $3.65 – 7.9% higher than the IGO offer price.
IGO commented on Western Area's ongoing trading halt yesterday, saying:
IGO's understanding of the primary reason for this trading halt is that the independent expert engaged by Western Areas has concluded … that the scheme is neither fair nor reasonable to Western Areas shareholders …
As previously stated, IGO's valuation of Western Areas … [was] based on IGO's long term view of the nickel market fundamentals and price. Despite recent volatility in the nickel price, IGO's long term view on the nickel price has not materially changed.
After the market closed yesterday, The Australian reported the companies were back at the drawing board, with IGO refusing to push its offer price any higher than $4 per share.
IGO stated it was committed to chasing opportunities to add value for its shareholders. While assessing all options regarding the takeover, the company would remain disciplined.
IGO share price snapshot
Despite today's slip, the IGO share price has been outperforming the broader market lately.
It is currently 21% higher than it was at the start of 2022 and has gained 122% since this time last year.
