Lithium Power International Ltd (ASX: LPI) shares are flying high on Wednesday morning.
At the time of writing, the lithium explorer's shares are up 30% to 54 cents.
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Why are Lithium Power International shares rocketing?
As some readers may be aware, Lithium Power International has been in takeover discussions with Chilean copper giant Codelco.
Last week, the company dismissed reports that it was close to agreeing a deal at 50 cents per share. It advised that "the price stated in the article in relation to a potential transaction with Codelco of about 50 Australian cents per share is incorrect." This had many fearing that a deal would be made for less than 50 cents per share.
Well, the good news is that Codelco is willing to pay far more than what was reported.
According to the release, the two parties have entered into a binding scheme implementation deed that will see Codelco acquire Lithium Power International for 57 cents per share.
This represents a 119% premium to the undisturbed closing share price of 26 cents for Lithium Power International's shares on 26 September.
It also values the company at $385 million on a fully diluted basis.
Unanimously recommended
The company's board unanimously recommends that shareholders vote in favour of the scheme. This is in the absence of a superior proposal and subject to the independent expert's report.
Its largest shareholder, Minera Salar Blanco, intends to vote its 28.25% shareholding in favour of the scheme, subject to the same qualifications. As do all members of the company's board.
Commenting on the agreement, the company's CEO and Managing Director, Cristobal Garcia Huidobro, said:
We believe this transaction is a great outcome for LPI shareholders and for other stakeholders including employees, suppliers and the people of Chile, all of whom will benefit from the Maricunga Lithium Project being developed by a large, well-financed and experienced mine developer and producer as Codelco.
The Board believes this transaction reflects the hard work and achievements of the LPI team and the significant progress made in advancing the Maricunga Lithium Project to its current predevelopment stage
